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Where Are Our Millionaires? By: Leonard Lenny Vasbinder

Vasbinder.Leonard.Lenny.2014-02-14 12.22.28

 

 

If you want to be a Hollywood South millionaire, you do not need to be a well-known actor, producer, or director.  All you need is $900,000.00 and the State of Louisiana will pay you the difference.

Let me explain. According to Gordon Russell’s investigative report, “Giving Away Louisiana: Film Tax Incentives,” in The Advocate, Dec. 2, 2014, “Film productions don’t have any corporate tax liability because they are set up as limited liability companies that simply make payments to actors, crew, and vendors. Profits from a film are taxable, but they go to the film’s investors, who are usually based elsewhere.  As a result, most productions sell their tax credits to someone who owes taxes, which is legal under Louisiana state law, usually getting about 90 cents for each $1 worth of tax credit. Buyers, many of them wealthy movers and shakers, get 100 cents on the dollar from the state, creating a group of influential middlemen who benefit from the program.”

Will French, who helped author the Louisiana Film Tax Credit law, is also a major player in the film tax credit exchange industry.  The Secretary of State records shows he is the founder and/or officer of many businesses with “tax credit” as part of the business name, (Louisiana Tax Credit Finance, LLC, Oauchita Tax Credit Finance, LLC, and many others.)  He is also listed as the co-founder of the Louisiana Film & Entertainment Association, a trade association that vehemently opposed the changing of the law and issued the talking points to the  local actors, unions, and trade groups, who added their voice to the protest.

Julia O’Donoghue’s article, “Louisiana film tax credits could face restrictions, though what type is unclear,” in the Times-Picayune on April 28, 2015 documents more statements from Will French.

With all the controversy concerning the film tax credit program in the past two years, it brings to light, again, the fact that after 15 years and nearly $2 billion of Louisiana taxpayer dollars going into the film industry through the tax credit program, we have very little out-of-state infrastructure investment, and we still do not have a single producer, director, or actor, that is a Louisiana local resident, that has made even one of those million dollar paychecks, even though Louisiana has spent a billion dollars in six years, between 2008 and 2014.

For folks who may not realize just how much a billion dollars is, it is equal to one thousand millionaires! So out of nearly two thousand million dollars, over the past 15 years, do you really mean to tell me that not a single one of those million dollar checks could have been spent on the hiring and promoting of a single Louisiana resident to a major film job?

That is what was and still is wrong with the tax credit program. There is nothing that really pushes Hollywood to hire local or to permanently invest locally. The big productions come and go every 60 – 90 days and leave with millions of dollars of our hard-earned tax dollars each time they leave. And they leave almost nothing tangible behind–no studios, no office buildings, no local producers, no local directors, and no local actors that were promoted as a big star and paid the big bucks.

It should be noted that the filming of Season 3 of “NCIS: New Orleans” opened with the loss of “Brody” and even that spot could have been filled by a local Louisiana actress but instead, CBS went out of state for the actress to fill that spot with a NY actress, Vanessa Ferlito, taking the spot.  On a positive note, the show, as a local television series, has hired and promoted some locals to upper-level positions, but still no millionaires.

On a negative note, tens of thousands of the jobs that the film industry does give to locals are minimum wage or $8 an hour jobs as background (a/k/a extras) and are only day-player jobs.  Since the production gets a 40% rebate on those wages, it means the production is actually only paying out an effective rate of $4.80 (or less) an hour.  Further, considering the taxpayers are paying the 40% rebate, it’s a double whammy to these very low paid workers.  These background workers are almost always hired on a day to day basis and get a “pink slip” at the end of each day.

Hopefully, the new tax credit law changes, written by the legislature in 2015, which are geared more towards developing and promoting local, home-grown productions, will also open the doors for more local producers, directors, and talent to become more experienced and better known so that one of us will make one of those million dollar paychecks in the very near future.

For all the so-called “industry leaders”, trade groups, and workers in the industry who are crying about the $180M cap on the tax credits, only two years out of 16 have gone over $180M and I do not recall the sky falling during those other 14 years.  Yes, y’all are “acting” like Chicken Little.

One major suggestion for the next revision to the tax credit law would be to put in a clause that makes Louisiana an investor in each production that receives money from our tax credit program.  For the past 15 years, we have invested almost $2 BILLION and have not gotten a single penny back from any of the productions that made money.  There have been countless blockbusters that went on to make billions of dollars in combined profits over the years and each and every one of them should have had to pay back our investment, with an appropriate return.  Every other investor in a film expects to be paid back their investment with a nice return whenever a film is profitable—why shouldn’t we?

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