In the latest episode of the “Daily Variety” podcast, the Cover Story segment features Gene Maddaus from Variety, who discusses the intense debate arising as Hollywood’s systemic issues become a significant political topic in the races for L.A. mayor and California governor. The focus on the ongoing production decline and the departure of both production and executive jobs has motivated Hollywood to strongly advocate for a federal production tax incentive program.
“These trends of productions moving overseas and tax incentives being offered elsewhere have been ongoing for thirty years,” Maddaus explains. “The new aspect is the post-peak TV slump, which is largely driven by business models and interest rates, and the shift towards profitability by companies like Netflix over the past three to four years. This shift has resulted in a significant drop in jobs, leading unions to consider how to preserve remaining positions. This is where the push for a federal incentive, not just a California one, comes into play to compete with incentives from other regions.”
The topic of lost Hollywood jobs has become a contentious issue in the political campaigns earlier this year, as Los Angeles gears up for a mayoral election and statewide voters consider a replacement for Gov. Gavin Newsom in Sacramento.
“What actions can politicians take? California has already increased its production incentives significantly. Some may argue it’s insufficient, but there are limits to what California can accomplish. This is why many are looking to Washington for a federal incentive,” Maddaus states. “Ultimately, incentives are crucial in influencing production decisions. It’s not only that other countries offer attractive incentives while the U.S. does not; filming in other countries is also cheaper, even without incentives. The absence of a federal incentive combined with higher U.S. production costs explains why producers are opting to film abroad.”
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