Sunday, November 27, 2022

Film Tax, Manufacturing Tax Credit Bills Continue On

CalChamber recently released its eighth semi-annual California Chamber of Commerce Poll and the results were clear: two-thirds of voters believe the country is headed down the wrong track, while a majority feel the same about California.

While our state’s shortcomings grab all the attention, and deservedly so, there still are areas where California is quietly getting it right.

Two CalChamber-supported bills currently moving through the state Legislature show that our leaders want to assist some of California’s most important industries.

Film/TV Tax Credit

The first is SB 485, authored by Senator Anthony Portantino (D-La Cañada Flintridge). This bill would extend the film and television tax credit, authorizing the California Film Commission to allocate $330 million in tax credits each fiscal year from 2024–25 to 2029–30.

California’s Film and Television Tax Credit Program contributed almost $21.9 billion in economic output over five years and supported more than 110,000 total jobs in the state, according to a study released by the Los Angeles County Economic Development Corporation (LAEDC).

The study findings show that for every tax credit dollar allocated, the state benefitted from at least $24.40 in economic output, $16.14 in gross domestic product (GDP), $8.60 in wages and $1.07 in state and local tax revenues. The program also returned to state and local governments an estimated $961.5 million in tax revenue. (A more in-depth look at the credit can be found here).

SB 485 passed the Assembly Arts, Entertainment, Sports, Tourism and Internet Media Committee on June 15 and will be considered next by the Assembly Revenue and Taxation Committee.

R&D Credit

The second bill moving through the Legislature is AB 1951, whose primary author is Assemblymember Tim Grayson (D-Concord). The bill provides a sales and use tax exemption for the purchase of manufacturing, and research and development (R&D) equipment, expanding investment and production opportunities in California.

AB 1951 will provide California manufacturers the opportunity to continue to lead and compete in a domestic and global economy that operates on razor-thin margins. Further, the bill will facilitate further innovation, production of wide-ranging goods, and provide high-quality jobs throughout California’s regionally diverse economies.

AB 1951 is important to California because the state currently ranks among the highest in the nation in state and local sales tax rates. While the base state sales tax rate is 6%, when combined with local and district portions, the sales and use tax rate can reach up to 10.75%.

AB 1951 sends an important message: California is serious about retaining and attracting high-quality jobs and production. Every California manufacturing job supports at least 2.5 other jobs.

AB 1951 passed the Assembly and awaits action in the Senate Governance and Finance Committee.

California’s problems abound. But some solutions do too.

Staff Contact: Preston Young

Preston Young
Preston Young
Preston R. Young joined the CalChamber in October 2019 as a policy advocate specializing in health care policy and taxation issues. Young came to CalChamber from Schuering Zimmerman & Doyle, LLP, where he specialized in medical malpractice, health care, product liability and elder abuse litigation. Young holds a B.A. in communications from Saint Mary’s College of California, and earned a J.D. from Golden Gate University School of Law, where he was associate editor of the Environmental Law Journal.

Related Articles

Governor Signs Bill to Relicense Diablo Canyon Power Plant

A California Chamber of Commerce-supported bill that provides the mechanism to relicense the Diablo Canyon Nuclear Power Plant and ensure a source of essential carbon-free electricity to California has been signed by the Governor. SB...

Bill to Relicense Diablo Canyon Power Plant Goes to Governor

In the final hours of the session, legislators passed and sent to the Governor a CalChamber-supported bill, SB 846 (Dodd; D-Napa), that provides the mechanism to relicense the Diablo Canyon Nuclear Power Plant. The...

Federal Inflation Reduction Bill: Review of Impact on California

Given its size and economic diversity, California will both enjoy and suffer some major effects of the Inflation Reduction Act — approved Saturday by the U.S. Senate and headed for approval by the U.S....