Ways of seeing

An alternative history of Hollywood, in other people's words:

"In 1913 many movie-makers headed west [to California] to avoid the fees imposed by Thomas Edison, who owned patents on the movie-making process."

"Films really blossomed in the 1920s, expanding upon the foundations of film from earlier years. Most US film production at the start of the decade occurred in or near Hollywood on the West Coast."

1943: "The wartime income tax accelerated the move by top Hollywood talent to set–up independent production companies, often as a corporation to produce a single feature film. By doing this, highly paid producers, directors and stars can be taxed at the capital gains rate of 25%, rather than at the personal income tax rate which can be as high as 80–90%."

1946: "The Internal Revenue Service closes the tax loophole for single–picture corporations. This forces many independent Hollywood production companies to seek out permanent financial and distribution deals with the major studios."

1948: "Under the terms of an agreement with the United Kingdom, American film companies will reinvest the $60 million profit, recently made in England, in various "permitted uses" such as hiring British talent, buying British story properties, etc. The English, in return, will reduce the 1947 tax on American films by 75%."

"Throughout the 1960s and 1970s, world cinema truly took off, but Hollywood struggled. Many countries began offering tax incentives to film crews willing to produce in their locations, drawing tourist money into their struggling economies."

"From the mid-1970s onwards, the Hollywood studios revived. The slide of box office revenue was brought to a standstill. Revenues were stabilized by the joint effect of seven different factors. First, the blockbuster movie increased cinema attendance... Second, the U.S. film industry received several kinds of tax breaks from the early 1970s onwards, which were kept in force until the mid-1980s, when Hollywood was in good shape again."

"Hollywood studios' invisible financing, including government subsidies and tax-credit deals, is no where better illustrated than in the way Paramount put together the deal for Lara Croft: Tomb Raider (2001). The budget, including Angelina Jolie's $9 million fee, was a staggering $94 million on paper. But after Paramount applied the arcane art of studio financing, of which the deal is a minor masterpiece, the studio's outlay was only $8.7 million.

"First, it got $65 million from Intermedia Films in Germany in exchange for distribution rights for six countries: Britain, France, Germany, Italy, Spain, and Japan. These "pre-sales" left Paramount with the rights to market its film to the rest of the world.

"Second, it arranged to have part of the film shot in Britain so that it would qualify for Section 48 tax relief. This allowed it to make a sale-leaseback transaction with the British Lombard bank through which (on paper only) Lara Croft was sold to British investors, who collected a multimillion subsidy from the British government, and then sold it back to Paramount via a lease and option for less than Paramount paid (in effect, giving it a share of the tax-relief subsidy.) Through this financial alchemy in Britain, Paramount netted, up front, a cool $12 million."

"In recent years, film and television productions have fled California for states and countries that have offered lavish tax incentives. Louisiana, whose rebate includes reimbursing productions for 25% of what is spent in state, recently lured "The Curious Case of Benjamin Button." After Michigan passed a law that reimburses productions for 42% of in-state spending, it succeeded in getting the filming of "Gran Torino" to move to Detroit from Minnesota, which has its own incentive program. New Mexico, Rhode Island and Georgia all have enacted similar incentives... The rapid outflow of productions has meant Hollywood must now fight for the industry that bears its name."

"The five-year, $500 million incentive program, signed into law in February 2010, began accepting applications on July 1. In a statement, Schwarzenegger said the tax credits were crucial for retaining film and television productions — and the economic multiplier effects — in California.

"The governor's announcement, citing statistics from the California Film Commission, pointed to a 50 percent decline in the number of films shot in California since 2003. In an effort to lure production back to the economically struggling state, the incentive program will cover 20 percent of expenses for feature films with budgets up to $75 million and 25 percent of expenses for independent films with budgets capped at $10 million. Eligible television programs that have filmed entirely outside California and have since relocated can receive credits for 25 percent of expenses."