A message from President Acosta on film/TV tax credits

A Message from AFM Local 47
Dear Local 47 Members:

For those Local 47 members unfamiliar with him, Richard Kraft is an agent who represents composers. He believes film/TV tax credits don’t work for musicians, and has in fact supported and promoted a slick campaign, complete with a big-money, Fox-News style video, against them. The thrust of his campaign is that we musicians should not try to seek jobs, or follow the lead of actors, writers, engineers, electricians, directors, grips and others in legislating tax credits to support our employment. This is a response to some of his many misinformed statements.

Fact check #1:

Mr. Kraft says: A 20% tax credit has already existed in CA for over a decade and produced no jobs for L.A. musicians.

Response: While the tax credit in CA has existed for over 10 years, this credit was tied to a meager $100 million per year in total for the state. That meant that pilots, TV and films were all vying for a minuscule credit. (Compare that to the $420 million made available by New York.) In addition, until the recent passage of AB 1839, the credit was distributed through a lottery system that provided a credit for a very small list of projects, including very few feature films with musical scores of any size. And, companies receiving the CA tax credit were required to produce their films in CA to be able to get a scoring credit. All of these restrictions severely limited the impact of the CA credit for musicians’ jobs. However, the law has changed. The CA program has been tripled, to $330 million per year, and the lottery system is being replaced by a more comprehensive valuation system. With the recent introduction of AB 1199 to further amend the state’s tax credit program, we now have a real opportunity to enact legislation that will bring jobs to our members. 

Fact Check #2

Mr. Kraft says: Companies that record AFM have to pay residuals and would rather not, hence scoring abroad.

Response: Generally, companies that produce films don’t pay residuals. The distributor pays that obligation, and the reality is that the lion’s share of AFM film scoring is non-signatory employment. Clearly many companies are not opposed to paying musicians under AFM contracts, even though they may have no obligation to do so. Residuals are the standard form of deferred compensation for members of all U.S. unions and guilds. UK musicians are suffering themselves, and we hear multiple reports that UK musicians would rather have residuals than continue to work under their current model.

Fact Check #3

Mr. Kraft says: Tax incentives are a red herring.

Response: A post-production tax credit has yet to be introduced in CA. Yet in NY – where they now have a $12-million annual post-production credit – employment has begun to increase for NY recording musicians. Not only has NY scored several feature films because of their tax credit, they have also seen an uptick in TV scoring. One feature film scored in NY due to their post-production tax credit generates $200,000-$300,000 in upfront wages to NY musicians along with an additional 70% in deferred compensation. The universe of films that do not score in CA is finite, not infinite, and if eliminating residuals for musicians scored 10 more films, the loss in deferred compensation would never be made up. 

Fact Check #4

Mr. Kraft says: An increase in CA tax credits will yield $0.

Response: A post-production tax credit has yet to be introduced in CA, so, in the absence of a crystal ball, it is disingenuous to speak definitively about its potential for success. AFM Local 47 has been able to organize new work because of the existing tax credit, and AFM musicians will continue to benefit from CA productions that hire sideline musicians in addition to scoring in the state. With the CA tax credit program increasing to $330 million dollars in 2015, the expectations are for continued growth in our industry. 

Musicians speak with a powerful voice to our public officials, and we have tens of thousands of musicians throughout our great state of California. We are gaining support from sister labor unions and the Recording Academy, alongside a growing list of allies. Local 47 is optimistic that as we build and strengthen our relationships with elected leaders in Sacramento, in City Hall and at the Federal level with the support of the AFM, real progress can be made on behalf of our employment. Local 47 members should consider this question: Why in the world would an agent oppose this?

You can show your support by signing our petition to support AB 1199 to make continued improvements to CA’s Film/TV Tax Credit Program for musicians.

Fraternally yours,
John Acosta
President, AFM Local 47

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