NY legislators OK tax breaks for music and game producers

July 5, 2016 By Michael Virtanen Associated Press

Joe Lentol. Photo courtesy Lentol’s office

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New York lawmakers have endorsed $50 million in annual tax credits for producing music and digital games, hoping such incentives will do for those industries what they did for television and movie production in the state.

“New York was once the epicenter for music production, and we have lost much of this business to other states’ aggressive tax incentive programs,” said Assemblymember Joseph Lentol, a Brooklyn Democrat. “We need this business back.”

The bill, which goes to Gov. Andrew Cuomo’s desk, would offset 25 percent of expenses like studio rentals, music mixing, session musicians, programmers, and video design and editing done within the state. An additional 10 percent credit would apply outside the New York City area.

Advocates said California, Louisiana and Tennessee already have similar music incentives.

Sponsors say it is needed because New York has less than 4 percent of commercial music production estimated at $17 billion nationally and an even smaller fraction of the $55 billion global business. They estimated New York’s share of the $25 billion U.S. gaming industry at 1 percent and said it’s “an insignificant blip” of the $70 billion worldwide total.

The breaks would be on top of the $420 million in yearly breaks now available to television and movie producers in New York.

The governor’s office says the bill is among hundreds passed by lawmakers that area under review.

Empire State Development, which administers the film tax credit, said applications to the program increased to 202 last year, up by 50 percent from four years earlier, and have included relocation to New York of shows such as “Quantico” and “Homeland,” according to the agency.

In the first half of this year, 90 productions with combined New York spending of $1.25 billion and nearly 90,000 hires applied for credits. Most were television series. Its basic credit is 30 percent, with another 10 percent in many upstate counties. Another bill heading to Cuomo’s desk would provide the extra credit to 11 counties in the Hudson Valley and Long Island’s Suffolk County.

E.J. McMahon, president of the fiscally conservative Empire Center for Public Policy, said music producers and game developers are getting a “very sweet deal” by piggybacking on the film industry’s lobbying. Much of the subsidized business was already here, he said.

“Like film and TV, the music industry is glamorous, heavily unionized and amply populated with wealthy performers and investors who give generously at campaign time,” he said.

“The basic rule of thumb is if you pay somebody to do something here, they will do more of it,” McMahon said. The question is “opportunity costs,” or what else the state could be buying with that $50 million or $420 million, such as repairing highways or better care for the disabled, he said.

Bills to extend the film tax credits to salaries and fees of writers and directors living in New York passed each house, but weren’t reconciled before the Legislature recessed.