'Runaway' Productions
Competing regimes began to spring up in Canada and other English-speaking countries which began to attract what is known as 'runaway' US film production.

Legislative Support For Film Production
Many industry observers have proposed that the United States or individual states offer comparable tax incentives to encourage production in the United States.

The American Jobs Creation Act Of 2004
The AJCA created a specific regime for tax incentives in film production.

The United States Film Industry

Although a number of US states offer local level incentives for film production, which are described below, there was until 2004 no national level incentive structure as such other than the usual tax shelter equation whereby investment into film production costs is deductible and taxable returns come only after an interval of years. The problem with films as an object of investment (as compared say with trees) is that the returns are far from guaranteed. Therefore the average investor will not choose films to invest in unless additional tax incentives are given.

However, the American Jobs Creation Act of 2004 included, amongst a myriad of other business tax breaks, a measure to benefit small movie production, basically allowing full write-off of production costs up to US$15m, at a presumed cost of US$336m. The limit rose to $20m for production in low-income communities in Alabama, Arkansas, Illinois, Kentucky, Louisiana, Mississippi, Missouri or Tennessee.

Original wording in the Senate bill would have given much more to Hollywood, but it is supposed that House Republicans were angry that the Motion Picture Association of America had picked as its top lobbyist Dan Glickman, a secretary of agriculture in the Clinton administration.

In fact, there were loopholes in the US tax system around the early '70s that allowed people to produce films and records and take most of their cost of production as a credit (not a deduction) against their tax bill. This resulted in thousands of wealthy professionals suddenly going into the film and record production businesses offering an unprecedented opportunity to get new projects funded. But these loopholes were plugged in 1978.

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'Runaway' Productions
Competing regimes began to spring up in Canada and other English-speaking countries which began to attract what is known as 'runaway' US film production.

Legislative Support For Film Production
Many industry observers have proposed that the United States or individual states offer comparable tax incentives to encourage production in the United States.

The American Jobs Creation Act Of 2004
The AJCA created a specific regime for tax incentives in film production.