Hollywood Takes Your Tax Money and Still Ships Jobs Overseas, Report Says

The entertainment industry is L.A.'s bastion of wealthy, white privilege, but our lawmakers recently gave it nearly $1.6 billion of your hard-earned tax money with the hope that Hollywood jobs would stay in Hollywood.

At least in one respect, the business has pocketed some of your cash but used a loophole to ship jobs overseas anyway. The local pro-labor group Los Angeles Alliance for a New Economy (LAANE) this week issued a report that says music work in film and television has plummeted roughly since the millennium as a result of foreign outsourcing.

What should really burn you is that in some cases the very corporations doing the outsourcing are taking your tax dollars that were intended to keep jobs at home, LAANE says.

A summary of the report says the number of musicians' jobs in Hollywood have dropped by 68 percent in 15 years "despite enormous subsidies paid to production companies in the form of federal, state and local incentives meant to generate quality employment."

LAANE, using sometimes-questionable "force-multiplier" mathematics that claim one job has ripple effects for other workers (from the local barista to the guy who repairs musical equipment), says this outsourcing has cost our region $280 million.

How are entertainment corporations getting away with it? The organization says that California's tax-incentive fine print doesn't specify that post-production work has to happen here, only that production does.

As a result, music-score work is being shipped overseas, to countries such as Macedonia, where it can be done cheaper. Jon Zerolnick, director of research at LAANE, calls it "runaway post-production."

He'd like to see future tax-incentive laws close that loophole.

(We have tended to find that these incentives, benefiting a wealthy industry that has, frankly, been hostile to California's diversity, are a waste of our cash at a time when roads are crumbling and college kids face increasing tuition).

"As studios are sending more recording work overseas, they are also accepting billions of dollars in tax breaks," Zerolnick said.

While LAANE says 94 percent of unionized recording work in North American happens in L.A., wily studios have realized they can save a buck shipping film-score work off to lower-quality locales.

LAANE summarized this example:

The report spotlights Lionsgate Films, producer of The Hunger Games, as a leader in the industry’s race to the bottom. While chasing after American tax credits, Lionsgate shifts scoring work to locations like Macedonia, where film scoring can be done below industry standard and for a fraction of what U.S. recording musicians would be paid.

Zerolnick, author of the report, told us that the studios probably save one-quarter of a percent of an average film's budget, or $143,000, by outsourcing the score.

The outsourcing, he said, "threatens the livelihood of musicians here and could possibly do lasting harm to the rich and diverse musical culture in California."

"For musicians," he said, "film-tax incentives are not working."

Send feedback and tips to the author. Follow Dennis Romero on Twitter at @dennisjromero. Follow L.A. Weekly News on Twitter at @laweeklynews.

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