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brSchumer Plan Passed Key Committee Last Week Senator Joins Broadway Stars to Rally For Final Passage in Senate House Proposal Gives Same Tax Benefits to Broadway Productions and Live Theatre As Those Already Afforded to Film and Television brbr brPresently, U.S. Tax Code Permits Tax Benefits for Film Television Productions, but Broadway Live Theater are Not Offered Any Federal Tax Incentives, Driving Productions Abroad to Countries Like Great BritainbrbrbrSchumer: The Federal Govt Shoul

U.S. Senator Charles E. Schumer today joined actors Neil Patrick Harris, Bryan Cranston, other top Broadway actors and characters, as well as a number of Broadway producers, as he announced his campaign to give Broadway and live theater productions a major tax break that will encourage investment and spur job creation on the Great White Way. Schumer today called 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 today noted 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 is rallying for his plan to help alter that reality; last week, he successfully fought for his amendment to be included in a Senate tax bill in that will be considered for a full vote in the Senate in the coming weeks.

Schumer was joined by actor Neil Patrick Harris, Bryan Cranston, Tyne Daly, cast members from  The Phantom of the OperaNewsies and Rodgers and Hammerstein's Cinderella. Schumer was also joined by Broadway producer Harvey Weinstein, Nick Scandalios, Chairman of The Broadway League and Executive Vice President of the Nederlander Organization and a number of other stakeholders in Broadway.

"Standing with this uncommon cast of characters, I'm making a final push to strengthen the very fiber of New York's being: Broadway and live theater," said Senator Schumer. "This plan, which would eliminate a double standard when it comes to taxing the entertainment industry, will mean more shows on Broadway, more jobs and more investment inandaround 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, live theater must be offered the same federal tax incentives as those afforded to television and film productions, so that investment in commercial stage production does not get pushed abroad. I am urging my colleagues to get this plan over the finish line and give its regards to Broadway!"

"With this historical tax amendment, Senator Schumer recognizes the importance of attracting investment in Broadway, both in New York City and across the country. Individual investors are the backbone of this iconic industry which entertains and supports the entire cultural community," said Charlotte St. Martin, Executive Director of the Broadway League. "Because of Senator Schumer's unwavering support, Broadway investors may finally gain a level of parity with the film and television industry in a monumental incentive for attracting new capital and eliminating some of the obstacles that currently dissuade potential backers from investing in live theatre."

The U.S. tax code now permits 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.  Under current law, Broadway shows and live theatrical productions are not offered the same federal tax incentives. Schumer's amendment would allow live theater investors to receive the same benefit.

According to the Broadway League, Broadway attendance in 20122013 reached 11.5 million. Broadway contributes $11 billion to New York City's economy on top of ticket sales and supports 86,000 jobs. Broadway is a world renowned tourist attraction, with over 7 million tickets purchased by visitors per year. Broadway also attracts repeat visitors; 58 percent of the audience attends at least two shows a season.

The benefits go beyond New York.  In the 2008 - 2009 theatre season (the most recent year for which data is available), approximately forty Touring Broadway productions traveled the country and performed in 192 venues to more than 13 million theatregoers.  These shows contributed almost $3.4 billion to the U.S. economy - $1.5 billion in show investment and $1.9 billion in visitor spending.  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 3.5 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 amendment would add commercial theatrical productions to the list of activities that qualify for immediate expensing under Internal Revenue Code 181, which accelerates deductions and precludes investors from paying income tax on profits until such profits are actually realized. IRC 181 currently 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. 

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.