A new proposal from the California government office mandates production houses to meet their diversity goals, or they will lose 4% of their tax credit allocation. This is part of the five-year extension plan of the state’s $330 million tax credit.
Production houses must submit a diversity work plan wherein they must employ crew members that reflect the state’s demographics. Had they failed to meet their goals, or even neglected to submit a work plan, they will be subjected to a deduction of 4% from their tax incentives, as per the California Film Commission.
California’s Film Tax Credit Proposes New Rules To Ensure Diversity In The Entertainment Industry
This incentive program for movie productions has been brewing since 2009 and was established to combat “runaway production.” In the past two years, California legislators have seen an opportunity to broaden the spectrum and use it to diversify the entertainment business.
A $150 million program was founded in 2021 by Assemblywoman Wendy Carrilloto to cater to the manufacturing of soundstages. The bill included a provision that allotted a 4% bonus to all houses that meet diversity goals.
The allocated $330 million agenda will expire in 2025, but lawmakers proposed to extend it until 2030. Last year, the government was planning to implement a bonus from the soundstage credit, although the progress was delayed in August. In February this year, the proposal was amended, and the latest version now provides a 4% penalty for those who fail to comply.
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Motion Picture Association has not commented on the plan yet, since it remains under the scrutiny of the legislators. The proposal reiterates that the company’s plan should reflect the state’s population in the line of “race, ethnicity, disability status, and gender.” The first draft of the bill did not include any mention of disability status.
Meanwhile, Governor Gavin Newsom proposed making the credit refundable to allow studios that do not hold state tax liability to just pay in cash. A statement from the Legislative Analyst’s Office reveals that the change will cause the administration to shell out $200 million.
Public Expresses Dissatisfaction With California’s Film Tax Credit Proposal
The Legislative Analyst’s Office came to the conclusion that the entertainment business is more or less “a couple percentage points” higher without the said program. There is no assurance, though, that the extension given by the legislators would cause any significant expansion for the economy.
The statement also noted:
“Instead, the film tax credit’s most likely impact appears to be increasing the motion picture industry’s share of California’s economy. Given this, how the Legislature assesses the Governor’s proposal should primarily depend on how much it prioritizes the importance of maintaining Hollywood’s centrality in the motion picture industry.”
The public also reacted to the film tax credit plan, and most of them did not find the proposal a good idea. Check out their tweets below:
Hollywood managed to kill the golden goose.
Anywho, check out my book "Dark Fallen Days" availabe on Amazon.
If you like evil in small town stories check it out.— Nicholas Peluso (@darkfallendays) March 2, 2023
What if instead of penalizing 4% for not doing it. They add 4% for doing it?🤷🏻♂️
— Kent Randell (@kentrandell68) March 2, 2023
And thats why they wonder productions are actually leaving LA or California. Woke quotas never work.
— Kevin or Kieren Pay-ne according to John Travolta (@MrScaryPicture) March 2, 2023
This is just going to drive out productions to other states and countries.
— Make Helsa and Reylo canon (@leepunzel) March 2, 2023
DEI needs to be completely eradicated from all private and public institutions. This is illegal discrimination under the Civil Rights Act.
— Problem Tomatoes 🍅 (@ProblemTomatoes) March 2, 2023
Only time will tell if the proposed film tax credit will contribute significantly to the state’s economy or strengthen the diversification of employees in the entertainment industry. Stay tuned for more updates on this news.
