The Senate voted 52 to 45 today to strip from the massive stimulus package a $246 million provision that would have allowed the film industry to take accelerated depreciation on equipment costs in 2009.
The movie industry, already hampered by a credit crunch that makes it harder for filmmakers to raise capital, wanted parity with other industries. So it asked Congress to extend to the movies the “bonus depreciation” offered to other sectors of the economy, allowing businesses to write off 50% of their equipment costs for this year.
“We see no reason why the film industry should be excluded,” said Michael O’Leary, senior vice president for the Motion Picture Assn. of America. “We employ 1.5 million people – and generate $10 billion in taxes every year. We are part of the solution.”
But Republicans, sensing a scapegoat for their anger over a bill whose price tag is nearing $900 billion, made Hollywood the villain.
Calling the measure “a tax break for Hollywood,” Oklahoma Sen. Tom Coburn noted that the studios already get a write off of up to $15 million for productions filmed in the USA.
Coburn says the new provision would allow Hollywood’s filmmakers to claim both tax benefits and he has authored an amendment to strip the provision from the bill. The MPAA claims the bill is very specific – producers can claim one or the other.
But Coburn, who has been waging a virtual one-man war against earmarks in the Senate, made no bones about attacking Hollywood in an effort to strip the provision from the bill. Noting that box office receipts in January were up nearly 20% over last year, Coburn said he wanted to “ensure that taxpayers are not subsidizing Hollywood with special tax breaks during an economic downturn.”
O’Leary, asked if Hollywood is being unfairly tagged as the villain, said, “We want people to look behind the glitz and the glamour. People take pot shots at Hollywood, but behind every movie are hundreds of people who work for a living.”