NYC"s 30% Tax Break Lures "The Tonight Show" Home

“The Tonight Show” made its return to New York City with a splashy opening sequence showcasing Grand Central Terminal, the Chrysler Building, Lincoln Center and Jimmy Fallon’s glamorous new studio at Rockefeller Center — a fitting tribute to the place that helped foot the bill.

An unconventional 30 percent tax credit aimed at luring “Tonight” away from California after four decades is reportedly saving NBC more than $ 20 million a year.

The network said that while the show relocated to New York for creative reasons the move wouldn’t have been possible without the tax credit.

New York’s mayor believes the show’s relocation was a triumph with wide-ranging benefits.

“Bringing ‘The Tonight Show’ back to our city means we’re bringing more than a hundred jobs to hard-working New Yorkers, and giving travelers another great reason to visit,” said Mayor Bill de Blasio.

Others are less certain of the show’s benefit — or the need to use a tax incentive to lure it back.

“We’re going to change our tax policy — in the heaviest-taxed city and state in the country — to get another late night show in Manhattan?” asked E.J. McMahon, head of The Empire Center for Public Policy, a non-partisan think tank. “Even the money that they bring is a rounding error in the New York City economy.”

“Other industries don’t get 30 percent credit,” he continued. “It’s because it’s a glamorous industry.”

The tax incentives were inserted into the state budget by Gov. Andrew Cuomo’s administration in early 2013 as NBC was debating dropping the show’s then-host, Jay Leno, for Fallon and potentially leaving Los Angeles to return to New York, where the show started in 1954.

The language of the 30 percent annual tax credit was remarkably specific: It would only benefit a show that had filmed at least five years in another state before moving to New York (check), spends at least $ 30 million in production costs (check) and films in front of a studio audience of at least 200 people (check). In other words: “The Tonight Show.”

Cuomo’s team has downplayed the idea that the credit was specifically for “Tonight,” though Kenneth Adams, commissioner of the New York State Department of Economic Development, said this week that changed were made to “attract these long-running, high-budget productions to New York State.”

While NBC did not release financial stats for the new “Tonight” production, The Hollywood Reporter estimated the 30-percent credit would yield the network an annual savings of $ 22 million, based on the show’s recent annual production budget of more than $ 75 million.

An NBC spokesman said the network anticipates creating nearly 250 new staff jobs and then another 300 or so “indirect jobs” — such as tour guides — and hundreds more part-time jobs. The show’s arrival is just the latest in a filmmaking boom in New York City that dramatically increased under de Blasio’s predecessor, Michael Bloomberg. Twenty-nine TV shows in the 2013-14 season have filmed in the city as well as dozens of movies and several late night talk shows, including those hosted by David Letterman, Jon Stewart and Stephen Colbert.

All told, the television and movie industry created $ 8.2 billion in direct wages in New York state last year, trailing only California’s $ 17 billion. The growing industry in New York has been helped by a tax incentive program, which is capped at $ 420 million for all productions filming statewide. By comparison, California’s is $ 100 million, Florida’s is $ 119 million and Louisiana’s is $ 229 million.

“The tax incentives game is played by a lot of states and some have used it more than others,” said Sam Craig, director of the Entertainment, Media and Technology program at New York University. “But it’s not just that: New York City has made it much easier to shoot films here by making it easier to get permits and block off streets.”

Craig said the return of an iconic show such as “Tonight” has a “psychic impact that’s hard to quantify” that is good for civic pride as well as a more tangible one.

“Even if the tax credit saves NBC $ 20 million, the show’s production costs are still pumping, in one way or another, $ 50 million into the economy,” said Craig, who couldn’t recall another show-specific tax break.

The show’s pride in returning home has been obvious. Fallon, a New York native, made it clear he wanted to stay. The show’s producer, Lorne Michaels, told The New York Times last week that “it simply never came up that we would move to Los Angeles.” And during its premiere episode, the show placed U2 on the roof of Manhattan’s GE Building to showcase the city’s skyline as well as the band’s music.

“We’re at the world famous ‘Top of the Rock’ atop Rockefeller Center, 70 stories above the city,” Fallon roared as the band kicked in. “I couldn’t think of a better way to show off our beautiful city.”

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Newsmax – America

NYC"s 30% Tax Break Lures "The Tonight Show" Home

Indiana lures "Illinoyed" biz with tax breaks

Mike Pence is among many GOP governors using hardball tactics to lure businesses. | AP Photo

MUNSTER, Ind. — Illinois is hobbled with a billion dollar budget shortfall, looming pension crisis and politicians flirting with tax hikes.

Neighboring Indiana calls that an opportunity.

Continue Reading

The state is making an aggressive bid to lure disgruntled businesses across the border, with a campaign unabashedly asking on billboards and online: “Illinoyed by higher taxes?” They even took out an ad to pitch the message in the 2013-2014 Chicago Bears yearbook.

(Also on POLITICO: Why Wall Street is fed up)

“It isn’t poaching,” Indiana Commerce Secretary Victor Smith told POLITICO. “People are making informed business decisions.”

States have dueled over business investment for years, but the kind of rate-cutting and other hardball tactics pursued by Gov. Mike Pence is part of a groundswell of efforts from Republican governors.

In the boldest example, Texas Gov. Rick Perry has been crisscrossing the country touting the benefits of his zero income tax state. The potential 2016 presidential candidate went directly to Missouri’s Chamber of Commerce earlier this year, and governors in Louisiana and Kansas cite Texas as a primary reason to cut taxes in their states.

(Also on POLITICO: GOP Senate push targets blue states)

Indiana joins North Carolina, Nebraska, Michigan and others in what critics call a risky fiscal gamble for states with limited resources. Indiana localities, meanwhile, worry the business boon will not spread across the entire state.

Anecdotally, the pitch seems to be working, at least in the short term.

One of the new migrants is Tec Air, a nearly half century old Illinois manufacturer enticed by Indiana’s low taxes, central location and a package of incentives that helped close the deal.

“Indiana has a balanced budget and they’re solvent,” said Tec Air president Bob McMurtry in an interview with POLITICO. “We are getting three times the spacial footprint and we’re going to be paying less than half of what we pay now in real estate taxes.”

(WATCH: Scott Walker: Next GOP presidential nominee must be a governor)

Since January, Indiana has passed a major tax cut that will trim corporate taxes from 7.5 percent to 6.5 percent by the end of 2015 and cut individual taxes from 3.4 to 3.23 percent by 2017.

Pence, a former member of the U.S. House of Representatives, inherited the job creation drive when he took office in January of this year. But he is now pushing deeper tax cuts and an effort to scrap business property taxes, with the hope of sparking an Indiana boom.

At the same time, Pence announced $ 57 million in spending cuts this month to offset lower-than-expected tax collections.

Critics say the strategy has a spotty history of success.

The left-leaning Center on Budget and Policy Priorities analyzed economic growth data from states that cut taxes in 1990s and the 2000s and found that, on average, those states grew less than the other states.

(Also on POLITICO: Tea partiers take on GOP senators)

“It isn’t clear that they did worse because of the income tax reduction, but they certainly didn’t do any better,” said Michael Leachman, the group’s director of state fiscal research. “That’s consistent with the academic literature on this topic which finds in general that income tax levels don’t matter for economic growth.”

It is always tricky to isolate the impact of tax policy and the evidence in Indiana may be equally tough to judge. The economy was already starting to grow in the two years that preceded the tax cuts. In 2012, 256 companies committed to create over 27,600 jobs and the state created about 19,080 jobs in 2011.

A 2012 Pew Charitable Trusts study found that most states do not properly evaluate whether they are getting a good deal for the tax breaks they dole out.

Still, the deep cuts are attractive for business in neighboring states like Illinois, where income tax rates are 9.5 percent for corporations and 5 percent for individuals.

Indiana’s commerce secretary said the math works.

“We’re sitting with $ 2 billion in cash reserves and we’re adding another quarter billion,” Smith said. “We have an honestly balanced budget. We don’t create false growth expectations to get gimmicky.”

When Smith, a former manufacturing executive, was appointed in January he was given one goal from Pence—adding 2,609,000 private sector jobs. He said the state has added 22,000 jobs since January, though he acknowledged he has a long way to go.

POLITICO – TOP Stories

Indiana lures "Illinoyed" biz with tax breaks