[Congressional Record (Bound Edition), Volume 160 (2014), Part 7]
[Extensions of Remarks]
[Pages 10269-10270]
[From the U.S. Government Publishing Office, www.gpo.gov]




   INTRODUCTION OF LEGISLATION TO EXTEND SECTION 181 OF THE TAX CODE

                                  _____
                                 

                          HON. JOSEPH CROWLEY

                              of new york

                    in the house of representatives

                         Tuesday, June 17, 2014

  Mr. CROWLEY. Mr. Speaker, I rise with my colleague from Georgia, 
Congressman Doug Collins, to introduce legislation 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.
  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.''
  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 $2.7 billion to over 23,000 vendors in 
New York State. Moreover, in that same year, filmed production 
accounted for $7.1 billion in spending and employed 130,000 people in 
New York City, according to the Boston Consulting Group.
  Section 181 of the Internal Revenue Code allows production companies 
to deduct the cost of qualified U.S. productions immediately 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. In 
the last decades, New York City and in particular my home borough of 
Queens has seen a resurgent television and film production sector bring 
new jobs and revenue into the community. Film production jobs in New 
York grew by nearly 25 percent between 2008 and 2011, at a time when 
private sector employment was falling. This bill will help to ensure 
that those jobs stay here in the U.S.
  The bill we are 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

[[Page 10270]]

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.

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