How Big Business Exploits Hollywood Tax Breaks
Hollywood power players like Ben Affleck, George Clooney and Sean Penn routinely tout a progressive path for the U.S. When it comes time to shoot a movie, said stars often end up following a studio's conservative path to where state tax incentives lead them.
Now, an "expanding web of brokers, tax attorneys, financial planners and consultants" are exploiting the system in a way that gets cash quicker to Hollywood while offering businesses a nifty new tax break. Consider Ric Reitz, a financier featured in the LA Times article, as an example of how the system works.
In his case, he takes the tax credits given to Hollywood studios for location filming and sells them to wealthy Georgians looking to shave their tax bills — doctors, pro athletes, seafood suppliers, beer distributors and the like.
Such deals can benefit affluent businessmen as well as larger corporations like Comcast. The parties end up paying less taxes while the studios can get their mitts on the money more quickly than waiting for the tax refund check in the mail.
Burbank-based Entertainment Partners, a big payroll-services provider, says it has handled the transfer of more than $200 million in tax credits for 100-plus projects since 2011. Most of the buyers are Fortune 100 companies.
Liberal actor Matt Damon steered his 2012 anti-fracking project Promised Land to Pennsylvania, in part, due to tax incentives.
Pennsylvania's maximum 30% tax credit was a chief draw for producers of the 2012 drama "Promised Land." The film's creative team — producer Chris Moore, director Gus Van Sant and actor-producer Matt Damon — chose the state in part because it allowed them to sell a 30% tax credit.
Doing so saved the production plenty of cash and likely helped someone wealthy avoid paying his or her fair share of taxes.
[Cross-posted from Big Hollywood]