South Carolina has been Hollywood’s pick for movies and TV shows
South Carolina’s movie and television industry is getting noticed — a major HBO series filmed in Charleston is debuting this month — and industry officials want more government help to lure business. So far, that aid is proving difficult to find.
Congress is considering expanding a federal tax break for the industry this fall, but what the South Carolina entertainment community wants most are more tax benefits from the state.
The industry prefers rebates offered by the state over tax deductions from Washington because the rebates mean quicker reimbursement.
“Productions go where there’s a rebate,” said Tom Clark, South Carolina Film Commission manager.
Actor Danny McBride bought a house and moved his Rough House Pictures production company to Charleston from Los Angeles about two years ago.
The company filmed the HBO series “Vice Principals” as well as last year’s “Halloween” movie, starring Jamie Lee Curtis, in Charleston. The company’s series “The Righteous Gemstones,” also filmed in Charleston, will premiere on HBO on August 18.
McBride has been pushing for more help on the state level, meeting this spring with South Carolina state lawmakers and Gov. Henry McMaster to discuss boosting the state’s film production tax incentives. While the public officials were receptive, they made no firm commitments and took no action during this year’s state legislative session.
Washington help is often not the focus. So far, “we haven’t taken advantage of the federal tax breaks but want to find more ways to do so moving forward,” said Brandon James, president of production and development at Rough House.
Movies and TV shows have been eligible for a special federal tax benefit since 2004, but the law changed dramatically in the 2017 tax cut legislation.
The previous benefit allowed movie and television production companies to accelerate their depreciation deduction for U.S. production expenses of up to $15 million, or up to $20 million if incurred in economic hardship areas.
The tax benefit expanded in 2015, when Senate Democratic Leader Chuck Schumer of New York and Sen. Roy Blunt, a Missouri Republican, led the effort to allow certain theater productions to qualify for it. Schumer was applauded by Broadway constituents, Blunt by theater owners in Branson, Missouri.
Then came the 2017 tax cut bill with a more lucrative deduction, allowing movie, TV and theater interests to deduct virtually all expenses, though not until the year a film or show debuted in commercial release.
“It really is a big change,” said Christopher Cacace, partner-in-charge of theater & entertainment at Marks Paneth LLP in New York.
Independent production companies, however, regarded the pre-2017 tax break as valuable to them, because they could deduct expenses more quickly than under the new law. The independent companies make 70 percent of all American films and thousands of hours of television programs.
This fall, Congress is moving towards restoring that pre-2017 break while keeping the new benefit on the books and letting producers choose which version of the tax law to apply.
In South Carolina, the state is eager to build on momentum from recent productions — and strong publicity.
Boyd Brown, a former state lawmaker and lobbyist whose firm represents the Carolina Film Alliance, a nonprofit association dedicated to growing the film and TV industries in South Carolina, is hoping for at least $30 million next year in state funding for film production rebates.
That’s roughly double what South Carolina spends annually. The larger amount, Brown said, “will ensure we don’t lose out on productions so folks who work in the film industry don’t have to be nomads for three, four, five months out of the year when we run out of (rebate) money when production stops.”
More incentives of any sort could help local residents whose businesses benefit from entertainment industry spending.
Tyler Daum of Charleston organizes transportation for productions in the area. He’s employed up to 35 people at a time. He said there’s more business available, but it’s slow in coming as companies tend to go where states are most generous — such as neighboring Georgia or North Carolina.
David Simmons, a real estate company president, would like to build a studio complex near Charleston.
But he needs the state to lure more business, and finds that the studios pick and choose states “depending on the state incentives.” Those incentives vary widely from state to state.
South Carolina’s program includes rebates to production companies that spend at least $1 million filming in the state.
Qualified productions can submit receipts and apply for a 30% tax rebate based on total in-state purchases with state suppliers and a 25% reduction on production expenses from all other suppliers.
The state also offers a 25% rebate for all wages paid to state residents subject to state tax, and a 20% rebate for non-residents, including all actors and stunt players, no matter their state of residence, according to the state’s film office.
There is no cap on the amount a production can receive, but there’s a limited amount of money available each year. The state typically has $15.5 million to distribute in its fiscal year that ends June 30.
Between 2014 and 2018, the South Carolina Film Commission reported 17 feature films were made in the state, as well as 28 television series and nine commercials.
The projects employed 15,975 people and spent $279.2 million. The state rebated the companies $59.4 million. There’s no estimate available on how much the projects received in federal tax benefits.
Congress is convinced that movie, television and theater productions also need more federal help.
Less wealthy, independent producers particularly liked the pre-2017 federal tax benefit because it went into effect from the start of the production process. The new 2017 law provides a bigger deduction if it’s taken when the product is commercially released.
Reviving the pre-2017 benefit is “incredibly important” to independent producers, said Jean Prewitt, president and CEO of the Los Angeles-based Independent Film & Television Alliance.
Top House and Senate tax-writers are listening. Reviving the pre-2017 benefit is included in a package of other tax measures approved in June by the House Ways & Means Committee and appears headed for a vote by the full Democratic-led House of Representatives.
In the Republican-led Senate, the benefit is included in legislation sponsored by the tax-writing Senate Finance Committee’s top members, Chairman Chuck Grassley, an Iowa Republican, and Democrat Ron Wyden of Oregon. The Senate is hoping to take up the tax changes this year.
Critics charge the revived tax is not only unnecessary but a giveaway to wealthy interests.
“The government should not be in the business of picking winners and losers. We believe in creating an environment that allows all of the private sector to compete on a level playing field rather than favoring specific industries,” said David McIntosh, a former congressman and now president of the Club for Growth, a conservative organization.