Movies

Hollywood’s chaotic week of tariffs and tax breaks ends with no clear direction

BBG News

It’s been a chaotic week in Hollywood.

Just a few days ago, President Trump proposed a 100% tariff on foreign-made films, an action intended to encourage domestic production. Many professionals within the entertainment industry anticipate this move could result in severe repercussions for the film business.

Subsequently, the trade publication Deadline shared Jon Voight’s “Revitalize Hollywood” plan, which the actor, known as one of Trump’s supposed Hollywood representatives, has recently presented to the President.

There’s been much debate and uncertainty within the sector regarding the optimal approach to maximize the ongoing attention on a significant matter – preserving U.S. production and employment – while doing so in a manner that positively impacts the entertainment industry as a whole.

As a passionate supporter of our filmmaking industry, I firmly believe that every bit of financial aid we can provide to filmmakers keeps our talented creators right here at home. Ideally, lawmakers will strive to be innovative and offer support to this esteemed field that’s highly valued in the United States.

Last Friday, the Motion Picture Association assembled a gathering with top executives from movie studios to brainstorm strategies in response to the Trump administration’s proposals, as well as to advocate for policies believed to increase local film production.

In contrast to other Hollywood unions and organizations expressing opinions on federal matters, the MPA remained noticeably quiet in public statements.

Representatives from the MPA and the studios declined to comment Friday.

Historically, reaching consensus within the MPA, a D.C.-based lobbying group representing major film studios, has been a challenging feat. This challenge has grown even more pronounced since the inclusion of streaming giants like Netflix and Amazon into the group. According to sources knowledgeable about the organization, these companies often have distinct objectives and, in certain instances, fundamentally dissimilar business strategies.

Some studio executives are anticipating that Voight’s collection of concepts for revitalizing Hollywood may serve as a preliminary design for a more authentic, tariff-alternative plan.

Or,

Studio executives are looking forward to using Voight’s ideas as a starting point for creating an authentic, non-tariff alternative in rebuilding Hollywood.

Both versions convey the same meaning but use different structures and wordings for variety and clarity.

Executives frequently argue that producing films and television series in the United States is excessively costly, despite the enticing incentives provided by different states. Since movies have minimal profit margins, filming overseas can decrease production expenses by up to 30%.

On a Wednesday, representatives from Sony, HBO, and Amazon convened at the Milken Institute Global Conference in Beverly Hills to address a particular topic. They emphasized that incentives, such as tax reductions, can have limitations; sometimes, production needs to take place abroad due to the specific story requirements.

Debora Cahn, the creator of ‘The Diplomat,’ stated that they are traveling abroad as their series is set in London. They expressed their desire to capture scenes with castles and palaces, as there aren’t enough of those locations available locally.

As a movie enthusiast, it’s evident to me that the vast majority of Hollywood, along with present and past city officials, aren’t keen on the application of tariffs as a means to resurrect film production within our borders.

According to former Los Angeles Mayor Antonio Villaraigosa, this will not aid us; instead, it could harm us, and potentially prove fatal.

Rep. Sydney Kamlager-Dove (D-Los Angeles), too, was skeptical of Trump’s tariff announcement.

I firmly believe that this approach is far from ideal for bolstering such a vital industry, not only for Los Angeles and our state, but also for our nation as a whole,” I expressed. “Our ability to create filmed entertainment is truly one of our finest accomplishments.

It’s why Voight’s plan is being looked at with interest.

The main focus is a “new federal production incentive for America,” offering a 20% tax reduction. Additionally, this could be increased by another 10%, if combined with a state’s existing film incentive.

Qualifying projects must pass a certain cultural benchmark, much like the one Britain uses for film subsidies. This incentive will extend to conventional television networks, streaming services such as Netflix, Disney+, Hulu, and online platforms like YouTube and Facebook.

The strategy additionally proposes an extension of Section 181 of the federal tax code for another five years. It suggests raising the limits on movie production costs to $20 million, or up to $40 million if the project is filmed in a rural location. This plan takes into account that film budgets have grown significantly since 2004.

Additionally, they proposed expanding the scope of Section 181 to encompass cinema owners, enabling them to make enhancements and modernize the infrastructure and technology in their cinemas.

The draft plan emphasized that movie-going by families is a cherished American tradition worth protecting,” or alternatively, “According to the draft plan, preserving family movie outings is an important part of our American cultural heritage.

If a product made in the U.S. is instead manufactured overseas to benefit from a foreign tax break, and that tax incentive amounts to a specific value, then a tariff will be imposed on that product equal to 120% of the amount of the foreign incentive received. In simpler terms, if an American-made product moves abroad to get a lower tax rate, a tariff (a tax) will be added to it when it’s brought back into the U.S., and this tariff will be equal to 120% of the value of the tax break that was enjoyed overseas.

According to the draft, this action isn’t intended as a punishment, but rather as an essential move to ensure fairness among all parties involved, without leading to an endless competition for the maximum reward.

Following its release, Steven Paul, one of the authors and Voight’s manager, stated that the document was primarily designed as a tool for discussion.

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2025-05-09 23:31

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