Schumer Rallied for Passage of This Bill Last Year Standing Alongside a Cast of Broadway Stars, Including Neil Patrick Harris, Bryan Cranston & Tyne Daly

U.S.  Tax Code Permits Tax Benefits for Film & Television Productions, But Broadway & Live Theater Have Never Before Been Offered These Federal Tax Incentives, Driving Productions Abroad to Countries Like Great Britain; Passage of Schumer’s Bill Would Help Attract New Productions & Spur Job Creation in NY

Schumer: New Federal Law Would Give Its Regards to Broadway!

U.S. Senator Charles E. Schumer today announced the just-unveiled must-pass tax package, the “Protecting Americans From Tax Hikes Act of 2015,” gives Broadway and live theater productions the same benefits that have long been afforded to TV and film productions. Schumer says that this benefit for Broadway will ultimately encourage investment and spur even greater creativity and job development on the Great White Way.

Schumer has publicly campaigned for passage of his key amendment that would change the federal tax code and create equal tax treatment for live theater by extending its investors the same benefits afforded already to film and television producers. Schumer explained that individual investors are the backbone of this industry, but it is often a prohibitively risky enterprise to invest and finance commercial stage production. Schumer today announced that the bill was successfully added to the current tax extenders package and should pass Congress this week. He also pointed out that failure to level the playing field for Broadway and live production meant that more and more productions would choose locations like London diminishing New York and American as the epicenter of culture and creativity.

“Finally, Congress will give its regards to Broadway. By eliminating the double standard in the tax code that prevented Broadway and live theatre from receiving tax benefits, New Yorkers will enjoy more shows, more jobs and more investment in-and-around the Great White Way,” said Schumer. “Culture and entertainment is one of America’s great economic drivers and investing in live theater is absolutely fundamental to the nurturing and growth of this critical sector of our national economy. As an integral part of the entertainment industry. I am urging my colleagues on both sides of the aisle and in both chambers of Congress to vote for this bill so we can send this to the President’s desk immediately so that live theater—for the first time ever—can rightfully be offered the same federal tax incentives as those afforded to television and film.”

Robert E. Wankel, Chairman of The Broadway League and President & Co-CEO of The Shubert Organization, said, “The Broadway community is grateful for Senator Schumer’s determination and his commitment to the live theatre industry.  We are appreciative of his continuous efforts over the past several years to ensure that theatrical investors receive the same treatment as individuals who invest in television and film.  The Broadway and Touring Broadway industries have a combined economic impact of more than $15 billion dollars on the nation’s economy and employ tens of thousands of people in the U.S. and around the world, yet we are still very much made up of small businesses that actively seek financing from individual investors.  This relatively small amendment to the Tax Code will have a tremendous impact on the theatre business by eliminating one of the largest challenges that producers face when trying to attract capital for what is always a highly risky endeavor.  We applaud Senator Schumer, as well as the members of the Ways and Means and Finance Committees, for their extraordinary efforts and recognition of the financial and cultural impact of live entertainment.”

“Culture and creativity is the magnet that draws tourists and transplants to the Big Apple; and the culture we create here – from Hamilton to the West Side Story to A Chorus Line –  is also one of America’s great exports around the world. And it creates countless direct and indirect jobs across America,” added Schumer.  

The U.S. tax code has permitted expensing of qualified film and television production costs up to $15 million when 75% of compensation paid is for services performed in the United States. Accordingly, studios producing movies and television shows may immediately recoup their investments before taxes are assessed on any profits earned. However, Broadway shows and live theatrical productions are not offered the same federal tax incentives. Earlier this year, Schumer and Senator Roy Blunt (R-MO) introduced the “Support Theaters in America Growth and Expansion (STAGE) Act,” which would change the federal tax code to give Broadway and live theater the same tax benefit as qualified film. Schumer secured this legislation in the Protecting Americans From Tax Hikes Act of 2015, a package of expired tax provisions, known as “tax extenders.” According to the Broadway League, Broadway attendance in 2014 - 2015 reached 13.1 million. Broadway contributes nearly $12 billion to New York City’s economy on top of ticket sales and supports 87,000 local jobs.

According to the Broadway League, Broadway attendance in 2014 - 2015 reached 13.1 million. Broadway contributes nearly $12 billion to New York City’s economy on top of ticket sales and supports 87,000 local jobs. Broadway is a world renowned tourist attraction, with over 8 million tickets purchased by visitors per year. Broadway also attracts repeat visitors; 57 percent of the audience attends at least two shows a season.

The benefits go beyond New York.  In the 2012 – 2013 theatre season (the most recent year for which data is available), approximately forty-five Touring Broadway productions traveled the country, performing for nearly 14 million theatre-goers.  These shows contributed $3.2 billion to the U.S. economy. Live theatre audiences make countless ancillary purchases, such as parking, restaurants, hotels, taxis and gifts.  On average, Touring Broadway contributed an economic impact to the local economy that was 3.4 times the gross ticket sales.  This income is also vital to sustaining our nation’s theatres, as more than 50% of Performing Arts Center’s ticket sales derive from patrons attending the Touring Broadway series.  This revenue permits local venues to offer opera, ballet, unique exhibitions and to fund much needed arts education curricula.  Without Touring Broadway, all of these vital programs would suffer.

Unfortunately, a majority of commercial productions close before producers recoup their original investment.  Due to the tremendous risk involved, it is very unlikely that any managed fund or banking institution in the United States will lend resources for live theatrical productions, so the majority of capitalization comes from small or independent investors.  Costs for professional theatrical productions continue to rise dramatically and, as a result, attracting enough backers to fund new productions is becoming increasingly difficult. 

The United States has not utilized the tax and trade policy employed by many other countries to encourage investing in live theatre.  For instance, Great Britain already allows for the immediate expensing of production costs.  Accordingly, disparate tax treatment, combined with a number of other factors, have been driving American productions outside the U.S. for the past decade.  Although future income derived from licensing and royalties return to the country of the production’s origin, England, Australia, Canada and Asia are quickly becoming major centers for new play and musical development. 

Schumer’s bill would add commercial theatrical productions to the list of activities that qualify for immediate expensing under Section 181 of the Internal Revenue Code, which accelerates deductions and precludes investors from paying income tax on profits until such profits are actually realized. Section 181 permits such expensing of film and television production costs, provided that expenses do not exceed $15,000,000 and 75% of compensation paid is for services performed in the United States.  The tax extenders package will extend Section 181 for film and live theater through 2016.

Schumer’s provision, which allows 100% of an investment to be deducted by the investor from their income in the year of the investment, would eliminate the double standard involved with taxing the entertainment industry, and would help deepen the pool of interested investors in Broadway.


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