Zurich financiers back US film tax break, but warn of long wait and rising costs

More films and television shows could shoot in the United States under a proposed national tax break now before Congress. Financiers meeting in Zurich this week called the plan hugely positive, but warned it will take years to reach sets and could push budgets higher.

A bipartisan group of lawmakers unveiled a bill for a 20% credit on American labour costs, with bonuses that could lift the total rebate to 30%, as reported by Deadline. The measure would be a first-of-its-kind federal incentive for film and television, according to Deadline. It would cover qualifying productions costing more than $1 million for taxable years beginning after 31 December 2026.

The prize could be large. A Motion Picture Association study cited in the Zurich discussion claimed a federal credit could increase US production spending by $125 billion and add more than 143,000 jobs by 2035.

The wait will be long. Alex Walton, former Co-Lead and Partner at WME Independent, told the Zurich Summit he believed the incentive will happen within the next three to four years. He added that it will take time for the incentive to be realised and for financial institutions to be able to cash flow it, which is how producers borrow against a future tax rebate to pay bills during filming.

Walton also told the summit that foreign tax credits will then compete harder to maintain their positions. Countries and other governments already offer rebates to attract shoots, and a US credit would force them to respond.

Not everyone in Zurich was unreserved. Andrea Scarso, Managing Partner of IPR.VC, told the summit a US incentive would be positive but cautioned that production prices and budgets could rise by the same amount. If crews and studios charge more because a rebate exists, part of the benefit is absorbed.

Sarah Schweitzman, Co-Head of CAA Media Finance, told the summit a federalised US tax incentive would create jobs and invigorate crews. Her point speaks to several slow years for American film workers after strikes and a pull of productions abroad.

The draft is broad. The proposed 20% base credit would apply to all labour costs, both below-the-line, meaning crew and craft workers, and above-the-line, meaning directors, writers and principal cast, as reported by Variety. It would include post-production and visual effects work, the editing, sound and digital imagery finished after filming, according to the Los Angeles Times.

For viewers, this means less about what films get made than where. A national rebate would sit on top of existing state programmes in places such as California, Georgia and New York. Costs could rise too. But if the bill passes, the ledger in the projection box may finally favour a shoot at home.