Los Angeles Business from bizjournals - by I-Chun Chen

California film tax credits added $3.8 billion to economy
Los Angeles Business from bizjournals - by I-Chun Chen
Date: Wednesday, June 29, 2011, 1:45pm PDT - Last Modified: Wednesday, June 29, 2011,

California’s film and television tax credit program has generated more than $3.8 billion for the state’s economy over its two years so far and created more than 20,000 jobs, according to a study by Los Angeles County Economic Development Corp.

In 2009, the California legislature approved a five-year program of $100 million in annual tax credits on qualifying film and television productions. About 110 productions have been approved under the program so far.

In its study, the LAEDC looked at the effects of the first 77 productions that were approved for allocation of tax credits totaling $198.8 million and found that state and local governments received a return of $201 million from taxes, permits and fees.

For every tax credit dollar approved under tax credit program, at least $1.13 in tax revenue will be returned to state and local governments, the study said.

In addition, the productions approved under the program created 20,040 jobs and generated labor income totaling $1.4 billion.

The study also found that for each tax credit dollar allocated, total economic activity in the state will increase by $20.11. Labor income, including to the self-employed, will increase by $7.41 per tax credit dollar, while total GDP in the state will increase by $8.48 per tax credit dollar.

Initial tax revenue returned to local and state governments will be $1.06 per tax credit dollar, with the highest return on state tax credits generated by productions with large above-the-line expenditures.

The productions also could attract additional, or ancillary, production activity. Each additional $100 million in follow-on production spending facilitated by the local availability of talent, supplies and services generates at least $10 million in state and local taxes, or an additional 7 cents per current dollar of tax credit allocated, the study said.