Music Industry Groups Try to Hit the Right Note With Tax Credits
A coalition of music industry players is pushing for legislation in New York that would provide tax credits to in-state music professionals. It would give them an advantage that the film industry has enjoyed there for years.
New York has a tradition of supporting the arts through tax credits, but they’ve largely benefited filmmakers. Now the music industry wants a piece of the action.
The state’s tax credits for the film industry have brought a significant increase in film-production expenditures in New York over the past decade. In-state spending by tax break recipients rose from $600 million in 2004 to $1.5 billion in 2011, according to a study commissioned by the Motion Picture Association of America. Currently, New York has $420 million set aside to “encourage companies to produce film projects in New York and help create and maintain film industry jobs.”
But films aren’t the only cultural works being produced by New York’s creative class, and that’s where the proposed Empire State Music Production Tax Credit bill comes in.
The bill, expected to be introduced by State Assemblyman Joseph Lentol of Brooklyn when the legislature reconvenes in January, would provide a 20 percent income tax credit for qualifying expenditures to companies and individuals who record and produce music. The tax breaks would initially be capped at $60 million, according to a New York Times report, and would primarily benefit behind-the-scenes industry workers like studio engineers.
“Billy Joel is not going to get a tax credit, nor is Jay Z,” Lentol told the Times. “It’s going to be the working stiff that gets the credit.”
New York Is Music, a coalition of music industry organizations, is working with Lentol to draft and advocate for the measure. Coalition members include the Associated Musicians of Greater New York; Broadcast Music, Inc.; the American Society of Composers, Authors, and Publishers; and the Brooklyn Chamber of Commerce.
“The founders of New York Is Music, Justin Kalifowitz and William Harvey, approached me about creating a tax incentive to draw back some of the music production business that has been taken away by other states like Tennessee and Louisiana,” Lentol told the Brooklyn Daily Eagle. “I thought if we could do it for the film industry, why not for the music industry?”
But entertainment industry subsidies aren’t without their critics.
“Industry-specific tax incentives are nonneutral, and cause all of the other types of firms—the ones that aren’t in a politically favorable industry—to foot the bill,” Tax Foundation economist Liz Malm told the Times.
In California, where there are signs the motion picture industry is on the decline, the state’s Legislative Analyst’s Office urged caution in expanding tax credit programs.
“If the legislature wishes to continue or expand the film tax credit, we suggest that it do so cautiously,” they said in a report earlier this year. “We highlight several factors to consider. Specifically (1) responding to other jurisdictions’ subsidies could be very expensive, and (2) for state government, the film tax credit does not ‘pay for itself.'”