[Congressional Record Volume 160, Number 94 (Tuesday, June 17, 2014)]
[Extensions of Remarks]
[Pages E1007-E1008]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   INTRODUCTION OF LEGISLATION TO EXTEND SECTION 181 OF THE TAX CODE

                                  _____
                                 

                           HON. DOUG COLLINS

                               of georgia

                    in the house of representatives

                         Tuesday, June 17, 2014

  Mr. COLLINS of Georgia. Mr. Speaker, I rise today to introduce 
legislation with my friend from New York, Congressman Crowley, to 
extend section 181 of the tax code to continue to allow for the 
immediate tax write-off of the first $15 million (or $20 million where 
the production is made in a distressed community) of production 
expenditures for qualifying domestic film and television productions. 
In addition, our bill would extend section 181 treatment to live 
theatrical productions. We are joined on this bill today by our 
colleagues Mr. Boustany (LA), Mr. Neal (MA), Mr. Nunes (CA), and Ms. 
Sanchez (CA).
  Section 181 was first enacted in the American Jobs Creation Act of 
2004 and has been extended several times since. It was added to protect 
the U.S. television and film industry and to counteract the 
increasingly aggressive incentives offered by many foreign governments 
to attract production overseas. The Directors Guild of America noted, 
at the time that section 181 was passed, ``globalization, rising costs, 
foreign wage, tax and financing incentives, and technological advances, 
combined are causing a substantial transformation of what used to be a 
quintessentially American industry into an increasingly dispersed 
global industry.''
  Thus, in enacting section 181, Congress recognized the important and 
unique contribution our television and film production industries make 
to providing high-paying jobs and economic benefits in communities 
across the country. These productions provide good jobs not just for 
actors, writers and directors, but also for the local carpenters and 
electricians, the drivers and equipment operators, the caterers and 
hotel-keepers who provide services to these productions. It is 
estimated that a major motion picture shooting on location contributes 
$225,000 every day to the local economy. For example, in 2011, the 
major studios alone paid over $530 million to nearly 4,000 vendors in 
Georgia.
  Section 181 of the Internal Revenue Code allows production companies 
to deduct the cost of qualified U.S. productions immediately

[[Page E1008]]

rather than capitalizing the costs and deducting them slowly over time. 
The incentive accelerates the timing of the deduction but it does not 
change the amount of the deduction. In order to qualify, a film must be 
domestically-produced, that is, at least 75 percent of the total 
compensation paid for the production must be for services performed in 
the U.S. by actors, directors, producers and other production staff 
personnel. The deduction applies to the first $15 million ($20 million 
for productions in low income communities or distressed area or 
isolated area of distress) of a qualified film or television 
production. The cost of the production above the dollar limitation is 
capitalized and recovered under the taxpayer's normal method of 
accounting.
  I believe that section 181 remains an appropriately targeted 
provision, designed to encourage television and film producers to stay 
here in the United States and keep those jobs in our communities. For 
example, incentivized productions contributed over $800 million 
annually to Georgia's economic output from 2007 to 2010. In 2012 alone, 
the entertainment industry spent more than $870 million in Georgia, 
including new investments in infrastructure as several studios and 
other industry-related businesses have expanded or relocated in 
Georgia. This bill will help to ensure that those jobs stay here in the 
U.S.
  The bill I am introducing today also includes a new feature to extend 
section 181 benefits to live theatrical productions. As with films, 
theater not only provides cultural benefits but also provides economic 
benefits to local communities in the U.S. For example, according to the 
Broadway league, Broadway contributed $11 billion in 2012-13 to New 
York City's economy on top of ticket sales and supports 86,000 jobs. 
And the benefits are not limited to New York. Traveling Broadway shows 
contributed almost $3.4 billion to the U.S. economy, which helps 
sustain regional and local theatres allowing them to offer their 
cultural events. Live theatre audiences make numerous ancillary 
purchases, including restaurants, hotels, parking, taxis and souvenirs.
  Unfortunately, as with film, other countries are becoming more 
aggressive in attracting theatrical production overseas. This is 
important because future income associated with a production, such as 
licensing fees and royalties, return to the country of the production's 
origin. Thus, as more original productions move overseas, the U.S. will 
lose tax revenue associated with those productions. To help prevent 
this from occurring and to allow investors to recoup their risky 
investment more quickly, we believe it is important to extend section 
181 to theatrical productions.
  Finally, it is important to note that, while both film and television 
production and theatre production are inherently risky capital-
intensive businesses, neither industry qualifies for bonus depreciation 
that covered virtually every other American industry. Section 181 acts 
similarly to bonus depreciation to allow investors in these uniquely 
American industries to recoup their investments more rapidly. This can 
aid the decision to green-light a project or to produce it in the U.S. 
This will have ripple effects across the economy by generating revenue 
and jobs for a range of local businesses, such as caterers, hotels, 
equipment rentals, etc.
  This legislation works to protect these important industries and stem 
the flood of production to non-U.S. locations. Section 181, which 
expired at the end of 2013, should be extended and expanded as soon as 
possible in order to encourage domestic investment and keep television, 
film and theatrical production jobs in the United States.