Now, on to an existential issue…

This latest federal tax incentive push seems like a total pipe dream, right? Even as individual states have duked it out for decades for the privilege of stealing Hollywood productions, producers have been praying that the U.S. government would offer a layer of support to stack on top of state and local programs, finally leveling the international playing field. But federally, it’s actually been going in the opposite direction. Even the small Section 181 incentive, which allowed immediate deductions of $15 million to $20 million in production spend in certain cases, expired at the end of 2025.

So now, everyone in Hollywood just accepts that we’re more likely to bump into an industry friend at Heathrow than at Craig’s, and that big-budget studio movies are made mostly in the U.K., where an incentive can return more than 30 percent of the qualified spend, highly flexible and with no cap on the money available. Project Hail Mary, for instance, cost Amazon $248 million to make. But after the U.K. credits, the final net budget was $192 million, according to internal data shared with me. And unlike in California, above-the-line expenses are eligible in the U.K.

That’s a big deal on a movie like, say, Netflix’s upcoming sequel to Once Upon a Time… in Hollywood, which was shot last year in California. Brad Pitt is making $40 million to star and produce, per several sources, director David Fincher is getting $20 million, and writer-producer Quentin Tarantino was paid more than $20 million for a one-picture license to make the movie from his script. (Tarantino always retains ownership of his material.) That’s $80 million in above-the-line costs that Netflix couldn’t include in its qualified spend for its California rebate but could have if the film was shot in the U.K. It’s no wonder that in the nearly five years of writing What I’m Hearing, I’ve been waking up earlier and earlier. More than ever, it feels like everyone I need to talk to is on London time.

But lately, Sen. Adam Schiff and other local politicians have been pushing harder for that federal program on top of the California incentive, which was recently raised to $750 million per year. At a media event in Burbank last week, and in a follow-up appearance on The Town today, Schiff argued for a baseline 15 percent national credit that would be modeled on the California program, which provides additional incentives for productions that relocate from elsewhere. That last part is great—stealing back some of what the U.K. has taken from the U.S.

It’s hard to know how much of this is lip service in response to the post-Peak TV content recession, the 2023 strikes, A.I., the Los Angeles fires, the affordability crisis… Pick your calamity that has befallen L.A. recently, they’ve all combined to light a fire under a political-executive class that basically did nothing as the region’s signature industry went bye-bye. Even L.A. Mayor Karen Bass and the famously difficult local film office recently cut fees to film at Griffith Park, which is… nice, I guess, but won’t do much to keep or lure productions. Film incentives used to be super-unpopular politically, but the usual excuses for rejecting them—essentially, why should the government waste money on fancy movie stars?—are much less compelling when talking about an industry that shed 42,000 local jobs between 2022 and 2024. Once considered elite and entitled, Hollywood is now a charity case.

Add in the hoopla around Donald Trump’s out-of-nowhere promise last fall of a “100 percent tariff” on foreign-made movies—not exactly a declaration of support for a federal incentive, but a sign that the president and his Hollywood “ambassadors” Jon Voight, Sylvester Stallone, et al., are at least thinking about the issue. For that reason, I think, as well as the local economy troubles, a bunch of other advocacy groups, like the Coalition for American Production and FilmUSA, have joined the MPA and the Association of Film Commissioners International in getting more aggressive. At the AFCI “Studio Summit” conference this week in L.A., enthusiasm around the federal incentive was a hot topic, one attendee told me today. It would create a national floor, at least, instead of 40 different lotteries in the various states that offer incentives. It would also allow states to compete more aggressively without as much fear of the incentives not paying for themselves in economic activity.

And Congress could structure the federal incentive to focus on workforce training or struggling locations—akin to other incentive programs that have boosted everything from agriculture to semiconductors to green energy. Framing this as an everywhere issue rather than a Hollywood issue is not only accurate— all but 10 U.S. states have some kind of program—but much more likely to win fans in red states whose leaders often dine out on attacking Hollywood and its politics.

Despite all this, the prospect of Republican lawmakers ultimately voting for a national film and TV incentive still seems like a Hail Mary. When I asked three prominent players in the space if they thought a federal incentive would happen, each replied with a version of “highly unlikely” (not on the record, of course). “This has to be bipartisan,” Schiff told me today. “You really can’t do much of anything in the Senate or the House unless you have bipartisan support. So we’re really doing outreach and trying to be flexible in those terms.”

Maybe so, but Schiff’s hearing last week featured exclusively Democrats and members of the Hollywood choir to whom he was preaching, including U.S. Representative Laura Friedman (Schiff’s replacement in the House when the Burbank congressman ran for Senate), The Pitt star/producer Noah Wyle, and Matthew Loeb of IATSE. “I think there is far more Republican interest in this,” Schiff insisted, telling me that several unnamed lawmakers wanted to attend but couldn’t make it. “What the Republicans in Congress are basically telling us, though, is they’re waiting for the white smoke from the Vatican. They’re waiting for the presidential tweet saying that he’s supportive.”

Exactly. Until Trump says he’s into a federal credit, it won’t happen. (Schiff told me he’s fine if his name is not on the bill, given Trump’s hostility toward the senator.) Or it won’t happen at least until the Congress flips blue, which may or may not occur in November, and even then, Trump could stand in the way. Schiff confirmed to me what I’d been hearing about the ongoing shadow lobbying effort: “The president’s own ambassadors to the industry, as I understand it, have been working with the Motion Picture Association to make the case to the president that the very best way to do this is a tax credit that will match what other countries are doing.”

So basically, the entire entertainment industry has to sit and wait around for the president to post his verdict on a potentially existential issue on Truth Social. Which is probably exactly why Trump brought up the subject of runaway production last fall in the first place.

An actor got déjà vu when I described a goal of Disney’s new C.E.O…

“You wrote: ‘Imagine if D’Amaro can turn Disney+ into a home for not just movies and TV but other interactive elements like shopping, socializing, scrolling, and yes, gaming, all under the Disney brand halo—a real game changer.’ Imagine! Imagine if Josh can be so bold and innovative as to invent Disney.go.com circa 2005!”

See you Monday,
Matt

Correction: Sam Mendes is directing Sony’s four Beatles movies, of course, not Sam Raimi, as Kim mentioned on Monday (though many readers would seem to prefer a Raimi version!). Apologies.

Got a question, comment, complaint, or better names for Larry Ellison’s yacht than “The Trump Propagandist”? Email me at Matt@puck.news or call/text me at 310-804-3198.

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