The Motion Picture Association and Hollywood unions including SAG-AFTRA, the Writers Guild of America, the Directors Guild of America and IATSE addressed President Donald Trump with actor and Washington D.C. ambassador Jon Voight in an open letter Monday, urging him to enact federal tax credits to bring film and TV production back to the United States.
The letter, obtained and reviewed by TheWrap, moved to appeal to the president by thanking him for supporting their industry through his “shared goal” of domestic production — but made no mention of his divisive call for a 100% tariff on foreign film production, made last week.
“We appreciate and thank you for the support you have shown our industry. We also appreciate your understanding of the need to increase domestic film and television production to bring back American jobs,” the letter read.
Rather than address proposals made by actor Jon Voight during his visit to Trump a week ago, the MPA letter asks Trump to support the renewal of three sections of the U.S. tax code that entertainment industry lobbyists have routinely pushed for during past presidencies.
An individual with knowledge of the MPA’s talks tells TheWrap that these tax code renewals were touched upon during the organization’s meeting last week with member studios. Such renewals, which are a common request from lobbyists of a wide range of industries, are seen as a low-effort way to help boost U.S. production instead of more dramatic changes like a new nationwide tax credit as proposed by Voight, which would require bipartisan Congressional support.
The primary renewal is section 181, a tax incentive that allows productions in the U.S. to receive a tax write-off on the first $15 million in spending for shoots in the U.S..
Section 181 was first passed by Congress and approved by President George W. Bush in 2004 and has been renewed ever since with regular support from the MPA and unions, though the unions are now requesting for the cap on that tax credit to double to $30 million with an extra increase to $40 million for shoots in low-income areas.
The letter also requests the revival of two tax code sections that previously expired: Section 199, which allows for reduced corporate tax rates for filmmaking and other forms of manufacturing in the U.S., and Section 461, which allows companies to carry back their net operating losses to lighten their taxes.
The letter marks the first major contact between Hollywood’s unions and Trump since his return to office, a relationship that was far from warm during his first term. Most notably, SAG-AFTRA ordered a disciplinary hearing in January 2021 against Trump, who was a member of the actors’ union, following the January 6 attacks. Trump later resigned from the union, with SAG-AFTRA passing a resolution denying any potential future reapplications from him.
Even this past week, the Hollywood unions signed on to an AFL-CIO statement condemning Trump’s proposed federal budget, which would eliminate the National Endowment for the Arts, the National Endowment for the Humanities, and the Corporation for Public Broadcasting.
“The notion that federal funding for the arts, humanities, or public media is a financial burden for working Americans is plainly wrong,” the letter read.
But the ongoing exodus of Hollywood productions from the United States, and especially California, has put the deep blue entertainment industry and its labor orgs in a position where its leaders feel it can’t pass up any opportunity for government aid on the state or federal level.
As unions, studios, and other industry stakeholders are lobbying Sacramento lawmakers to pass a major expansion to the California Film & TV Tax Credit Program that would include raising its cap from $330 million to $750 million and expand the types of productions that can qualify for the incentive.
While the proposed expansion is coming as part of a difficult budgetary process for California amidst unstable revenues and the impacts of Trump’s tariffs, industry insiders tell TheWrap they are confident the expansion will be approved by Newsom and state lawmakers, as Trump’s increased attention on the entertainment industry is expected to put more pressure on Sacramento to make moves to protect one of the state’s cornerstone industries.
Read the letter in full below:
Dear President Trump:
We appreciate and thank you for the support you have shown our industry. We also appreciate your understanding of the need to increase domestic film and television production to bring back American jobs and write seeking your support for the inclusion of three film and television industry priorities in the reconciliation package currently being drafted in Congress – Internal Revenue Code sections 199, 181, and 461.
We are a coalition comprised of creative industry unions and guilds collectively representing nearly 400,000 creative professionals that comprise the directorial, technical, and artistic teams that power the American film and television industry; film, television, and streaming studios and independent production and distribution companies with a $15.3 billion trade surplus powered by $22.6 billion in exports to every major international market; and your Hollywood ambassadors, whose leadership has helped us unite in support of these common goals.
Film and television productions are highly valuable projects for local communities across all 50 states. The average film shoot spends more than $670,000 each day on location and employs nearly 1,500 people, while an average TV series injects $49 million into a local economy. Film and television production spending also directly benefits workers and small businesses – more than 90% of vendors paid by productions employ 10 or fewer people, including caterers, lodging, equipment rental, transportation, and many others.
Over the past two decades, countries around the world have recognized the value of film and television productions and have increasingly offered significant incentives to attract projects and the high-paying jobs and local cash infusions they bring. Currently, more than 80 countries offer production tax incentives and as a result, numerous productions that could have been shot in America have instead located elsewhere. Returning more production to the United States will require a national approach and broad-based policy solutions, including those we propose below as well as longer term initiatives such as implementing a federal film and television tax incentive.
In order to achieve our shared goal of seeing domestic film and television thrive we would highlight three matters of particular importance that can be enacted through the current budget reconciliation process. These potent tax measures would immediately make America more competitive, expand the American media industry, brings jobs back to America, and support the independent spirit of American business:
- Section 199 (Domestic Manufacturing and Production Incentive)
- We strongly support your proposal to create a new 15% corporate tax rate for domestic manufacturing activities (down from the current 21% rate), using the old Section 199 manufacturing deduction regime as the model.
- Under the old Section 199, which expired in 2017, films and television productions that were made in the United States qualified as domestic manufacturing and were eligible for the tax deduction – and have historically promoted significant economic and job growth.
- Despite longstanding American dominance in film and television production, foreign countries have successfully lured high-value productions and associated jobs with aggressive incentive programs and have built infrastructure rivaling the U.S. A domestic production incentive would make the U.S. market more competitive and able to retain and return high-paying jobs tied to film and television productions – and the use of this deduction has historically promoted significant economic and job growth.
- As Congress seeks to reshore American jobs and promote growth in communities across the country, we ask for your support in urging lawmakers to include film and television productions made by workers in America in a domestic manufacturing and production incentive
- Section 181 (Expensing for American Film and Television Production)
- Congress first enacted Section 181 in 2004 to encourage domestic film and television production. Set to expire on December 31, 2025, we ask that a long- 3 term extension and expansion of this provision be included in the reconciliation package. Doing so represents an important step in keeping film and television production jobs in America.
- Currently, Section 181 allows up to $15 million of qualified film & TV production expenses to be deductible in the year incurred (or up to $20 million if produced in low-income or economically distressed areas). As these limits were initially set in 2004, we also ask that the caps on production expenditures be raised to $30 million (or up to $40 million if produced in low-income or economically distressed areas). We also believe that it is important to re-affirm the original intent of Section 181 that it be made available to investors.
- To qualify, a production must spend at least 75% of its labor compensation in the United States. Without Section 181, deductibility would begin only after a project is released to audiences, which can often be years after a production wraps up. The accelerated deductibility afforded by Section 181 reduces the cost of capital, provides cash flow certainty, and allows producers on tight budgets to green light productions that might not otherwise be made.
- Section 181 provides important safeguards to preserve U.S. production, especially for television series and for smaller budget and independent films. The global production landscape has evolved significantly since 2004, and Section 181 encourages domestic production and benefits American workers and small businesses. For these reasons, Congress has repeatedly ensured that the Section 181 domestic production incentive has remained in effect continuously for twenty years and we ask for your support that it be extended again now.
- Section 461 (Carry Back of Net Operating Losses)
- The Tax Cuts and Jobs Act repealed the ability of businesses to carry back losses, but the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted at the onset of the pandemic reinstated and expanded the carry back period for net operating losses (NOLs) to 5 years, but only through 2022. Businesses that have greater fluctuations in their income, such as film production companies that invest large amounts in films that may or may not pay off, need the ability to spread losses back to more profitable years in addition to carry losses forward. Our tax system generally allows businesses to spread losses and gains over a period of years to arrive at a stable and consistent calculation of taxable income. Reinstating the ability to carry back losses will allow businesses to use their own profitable years to offset later losses, resulting in greater financial stability. The UK and Australia have had similar provisions and those provisions attracted significant production investment.
We thank you for the support you have shown our industry. With your endorsement, these policy initiatives will help preserve and create American jobs, bolster local economies across the country, and ensure America remains the global leader in entertainment production.
More to come …
