Hollywood Labor Coalition Calls for Federal Tax Incentives to Revive Film Industry

A coalition of labor unions and the Motion Picture Association demanded on Tuesday the implementation of a federal tax incentive to halt the decline of film production in Hollywood.

The proponents of the measure calculated "the economic impact of introducing a federal incentive in the United States that would complement existing state programs, comparing two scenarios during the 2027-2035 period," according to the report titled "Economic Impact of a Federal Production Incentive in the United States."

The document indicates that this federal support would reverse the drop in domestic production and generate approximately 143,500 jobs per year in the audiovisual sector.

The report also argues that a 20% credit on production costs could double the size of the U.S. film industry by 2032, generating up to $125.3 billion in cumulative additional spending through 2035.

While 39 states already offer incentives and global aid programs grew by 40% between 2017 and 2025, the study warns that in the United States "there is no formal government proposal for a federal incentive."

To prepare the document, the authors used a simulated proposal baseline, as no formal government project currently exists.

For decades, Hollywood has suffered from the phenomenon known as "runaway production"—the exodus of major film and television productions to other countries due to a lack of attractive tax incentives.

This issue intensified during the COVID-19 pandemic, leaving the industry in an extremely vulnerable state that worsened with the historic writers' and actors' strikes that paralyzed the sector in Los Angeles in 2023.

Trump, who recently defended the idea of creating tax incentives to revitalize Hollywood, had threatened upon taking office to impose a 100% tariff on foreign films.

That proposed measure faced strong opposition from major unions and studios, who warned that it would paralyze global distribution.

In its place, industry representatives proposed enhancing tax credits, similar to those offered by countries such as Canada and the United Kingdom, as well as U.S. states benefiting from Hollywood's exodus, including New Mexico and Georgia.