How you can help get tax breaks for Broadway Investing.
If you ever felt like theater was the little bastard brother of the entertainment industry, wait until you hear this.
Section 181 of the Federal Tax Code allows investors of certain television programs and movies to deduct their investment from their income taxes in the production’s first year. But somehow theater investing was excluded from 181. (It’s pretty simple why, actually. The powers that be who make these tax codes know that most commercial theatrical investments are on Broadway. And Broadway, because it’s a place, not an industry, ain’t going anywhere. As opposed to film and TV, which has already traveled all around the world (Vancouver, anyone?) and taken jobs and tax revenues with it.)
Buuuuut, that’s starting to change. As theaters become less and less available . . . and as producing on Broadway becomes more and more expensive . . . I know many a Producer who are looking to London to start their shows. And I know many an investor who are investing in art in other ways than the theater (or just not investing at all).
The Broadway League and its relatively new Government Relations Committee (which has been doing bang up work, by the way, and is worth the cost of our dues on its own) has taken up arms to revise this tax code. And, politicians are starting to take notice.
Two Senators have shaken hands across the aisle (Schumer (D-NY) and Blunt (R-MO)) and added the theatrical exemption into a recently proposed bit of legislation.
But it’s not done yet.
This is where you come in.
The League sent out a call to arms yesterday to everyone in the theater industry to urge us to contact our reps to get them to support this common sense addition to the tax code.
Here’s what you can do to help little brother Broadway be heard.
I’m pasting a letter composed by the Broadway League that you can use to send on to your rep. Just copy it, paste it, fill in the blanks, and send it along. Need to find out who your rep is and how you can reach them? Click here.
Take a minute and do it. It will help. And you will help the theater. Because when this legislation passes, it’ll be easier for all of us to raise money.
Let’s raise a ruckus!
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Dear Representative _________________________.
On behalf of __________________________, we urge you to cosponsor HR 2405 – The Film Act, introduced by Representatives Crowley (D-NY-14) and Collins (R-GA-9) – and encourage you to contact your colleagues on the Ways and Means Committee and Leadership to push for its inclusion in the tax extenders package under consideration in the House. This language has already been included in the Senate’s recently proposed tax extender package.
Section 181 allows investors, when capitalizing a live production with a budget of under $15 million, to deduct the investment from his or her income taxes in the production’s first year. Currently, only TV and movie producers may benefit from 181, while investors in live theater must use an ‘income forecast’ method and estimate profits over the anticipated duration of the show. In successful productions this results in tax liability before producers even earn back their initial financing. Expanding 181 to include live theatre will eliminate a massive disincentive to investing in live productions, while the Joint Committee on Tax estimated this revision, part of the overall tax extenders bill, will cost just $1 million over a ten year period.
In addition to promoting new projects, this modest tax change will help the US compete with other theater centers around the world, particularly London, in attracting new productions. The same tax treatment we are seeking through Section 181 is currently afforded to England’s live entertainment industry. This, in addition to many other tax incentives not offered to US investors, has made it far more advantageous develop shows overseas. While a small number of foreign productions may ultimately tour the US, our economy loses millions of dollars spent on creative development, all rights to the intellectual property and future revenues generated from these productions (which would otherwise flow back to America).
Please note that this amendment is not a tax credit or subsidy, as it merely affects the timing taxes will be paid by successful productions. However, the revision would benefit all investors, production companies and venues that present commercial theatre and/or commercial tours. More productions translates to more product for the nation’s theatres and performing arts centers, more ancillary spending and more economic activity. Just as importantly, the majority of live performance venues that present Touring Broadway in the U.S. rely on the income generated from Broadway shows to subsidize their education, neighborhood outreach and audience development programs.
Again, we urge you to cosponsor and urge the Ways and Means Committee to include HR2405 in the 2016 tax extender package to facilitate investment in live theater productions in the U.S. Thank you for your consideration and please feel free to contact me if you have any questions or if I can provide further information.
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