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Seems like a less controversial solution would be to allow the same tax write-off if the studio releases the film for free distribution (e.g. via the Internet A

Seems like a less controversial solution would be to allow the same tax write-off if the studio releases the film for free distribution (e.g. via the Internet Archive), either into the public domain, or under a license like Creative Commons Noncommercial if there's concern about implicitly allowing derivative works by competitors or similar.

TheCleric 3y ago
Exactly. You want the tax break? The work now belongs to the taxpayers. Seems fair to me.
advael 3y ago
I think the tax writeoff should only be available for doing something like that. It's insane that corporations failing at ventures is so incentivised that they'll fail on purpose, and we shouldn't be offering tax breaks for behavior that serves no public good This kind of law is especially offensive in the context of rhetoric about social programs, wherein we create all sorts of onerous means-testing on the logic that someone, somewhere might actually be incentivized to use social services to ameliorate various forms of poverty and destitution In both cases, there is a balancing act wherein allowing too many false positives can create perverse incentives, and allowing too many false negatives fails to accomplish what the policy set out to do. I think a massive corporation taking a loss for making something unpopular is not an outcome we should be trying to prevent with government programs at all, but we are consistently prioritizing it over preventing outcomes like homelessness
- nerdponx 3y ago
  I don't understand the move in the first place. Do tax write offs for corporations work differently than for people? What's the point of spending $90m just to reduce your taxable income by $90m? It's not like corporations have progressive tax brackets. Or did they acquire the movie as part of the acquisition, and are now somehow able to claim a write-off for something they didn't actually spend any money on?
  - prepend 3y ago
    They don’t spent the $90M intending to write it off. This is a failure mitigation strategy where they failed and want to recoup as much value as possible. Studios still lose $60M when they write off $90M they are effectively only saving the $30M they would pay in taxes. It’s still not profitable and they want to avoid this as much as possible.
  - tpmoney 3y ago
    No it doesn't work differently and the framing of all of this in the media is terrible. No one goes into making a movie planning on writing it off. They made a movie and decided that it was actually not going to be something worth releasing / unable to recoup the expenses, so they're not releasing it. This happens all the time with movies at all sorts of various stages of production. It just so happened this movie was "finished" before the decision was made. If they'd done this 6 months earlier than they did before it was "finished" no one would care.
    - Dylan16807 3y ago
      It doesn't make any sense to claim that, starting now, the expenses to release are higher than the revenue they would get. Already-spent money doesn't matter because it's not coming back. If they cancelled many months ago, the expenses to release would have been a much bigger number. That's why it wouldn't have gotten the same complaints.
      - tpmoney 3y ago
        > It doesn't make any sense to claim that, starting now, the expenses to release are higher than the revenue they would get. Why not? Distribution isn't free. Contracts that specify payment on gross revenue aren't free. Just because the movie itself is manufactured doesn't mean there aren't still more expenses to be realized in release any more than just because your program compiles it means that your company can deploy it for no additional costs.
        Dylan16807 3y ago
- CSMastermind 3y ago
  > It's insane that corporations failing at ventures is so incentivised that they'll fail on purpose, and we shouldn't be offering tax breaks for behavior that serves no public good I believe the argument is that businesses would take less risks without the security provided by those tax write-offs. Presumably the increased tax revenue from businesses taking risks and having success outweighs the tax losses from risks taken, failed, then written off.
  - advael 3y ago
    Revenue implication makes sense as a priority for a business, it should be considerably less of a priority for a government. The degree to which the tax code subsidizes whatever a business cares to try regardless of the outcome is already clearly more than adequate to give most industries massive lobbying budgets, so I don't think the economy is going to break if we stop doing it. Businesses are already significantly insulated against risks of various kinds, including in many cases criminal liability for risking people's lives. We don't need to be creating perverse incentives in the hopes of making them less risk-averse
verisimi 3y ago
Why are movies given tax breaks at all, is the question.
- fred_is_fred 3y ago
  I think this specifically is a write off, same as if you made 500,000 widgets and nobody bought them.
- prepend 3y ago
  It’s not specific for movies. All businesses only pay taxes on profit. And the expenses spent to produce things are a “tax break” to offset revenue. This is done because it’s hard to pay taxes if you don’t make a profit as your money is already spent on other stuff like resources, people, etc.
sib 3y ago
Since - as only one example of the complexity involved - the music used in the film is almost certainly licensed and must be paid for, and the studio does not "own" it, there's no way that they can simply release it for free distribution or put it into the public domain...
- qingcharles 3y ago
  And having had this issue myself with a Hollywood movie, where the rights for the music in the final cut were too expensive, trying to replace the music is always horrible. Especially, as in this case, where you would likely have to go with public domain music.
tpmoney 3y ago
That seems even worse for all the people affected doesn't it? Anyone who had residual contracts now not only gets nothing like they were before, but their work is still actually being distributed, even if the studio in question is getting nothing for it. I feel like the first court case we'd see after something like this would be all the actors suing some "Rejectflix" company that springs up to provide a curated streaming site for these things.

TheCleric 3y ago

Exactly. You want the tax break? The work now belongs to the taxpayers. Seems fair to me.

advael 3y ago

I think the tax writeoff should only be available for doing something like that. It's insane that corporations failing at ventures is so incentivised that they'll fail on purpose, and we shouldn't be offering tax breaks for behavior that serves no public good This kind of law is especially offensive in the context of rhetoric about social programs, wherein we create all sorts of onerous means-testing on the logic that someone, somewhere might actually be incentivized to use social services to ameliorate various forms of poverty and destitution In both cases, there is a balancing act wherein allowing too many false positives can create perverse incentives, and allowing too many false negatives fails to accomplish what the policy set out to do. I think a massive corporation taking a loss for making something unpopular is not an outcome we should be trying to prevent with government programs at all, but we are consistently prioritizing it over preventing outcomes like homelessness

nerdponx 3y ago
I don't understand the move in the first place. Do tax write offs for corporations work differently than for people? What's the point of spending $90m just to reduce your taxable income by $90m? It's not like corporations have progressive tax brackets. Or did they acquire the movie as part of the acquisition, and are now somehow able to claim a write-off for something they didn't actually spend any money on?
- prepend 3y ago
  They don’t spent the $90M intending to write it off. This is a failure mitigation strategy where they failed and want to recoup as much value as possible. Studios still lose $60M when they write off $90M they are effectively only saving the $30M they would pay in taxes. It’s still not profitable and they want to avoid this as much as possible.
- tpmoney 3y ago
  No it doesn't work differently and the framing of all of this in the media is terrible. No one goes into making a movie planning on writing it off. They made a movie and decided that it was actually not going to be something worth releasing / unable to recoup the expenses, so they're not releasing it. This happens all the time with movies at all sorts of various stages of production. It just so happened this movie was "finished" before the decision was made. If they'd done this 6 months earlier than they did before it was "finished" no one would care.
  - Dylan16807 3y ago
    It doesn't make any sense to claim that, starting now, the expenses to release are higher than the revenue they would get. Already-spent money doesn't matter because it's not coming back. If they cancelled many months ago, the expenses to release would have been a much bigger number. That's why it wouldn't have gotten the same complaints.
    - tpmoney 3y ago
      > It doesn't make any sense to claim that, starting now, the expenses to release are higher than the revenue they would get. Why not? Distribution isn't free. Contracts that specify payment on gross revenue aren't free. Just because the movie itself is manufactured doesn't mean there aren't still more expenses to be realized in release any more than just because your program compiles it means that your company can deploy it for no additional costs.
      - Dylan16807 3y ago
CSMastermind 3y ago
> It's insane that corporations failing at ventures is so incentivised that they'll fail on purpose, and we shouldn't be offering tax breaks for behavior that serves no public good I believe the argument is that businesses would take less risks without the security provided by those tax write-offs. Presumably the increased tax revenue from businesses taking risks and having success outweighs the tax losses from risks taken, failed, then written off.
- advael 3y ago
  Revenue implication makes sense as a priority for a business, it should be considerably less of a priority for a government. The degree to which the tax code subsidizes whatever a business cares to try regardless of the outcome is already clearly more than adequate to give most industries massive lobbying budgets, so I don't think the economy is going to break if we stop doing it. Businesses are already significantly insulated against risks of various kinds, including in many cases criminal liability for risking people's lives. We don't need to be creating perverse incentives in the hopes of making them less risk-averse

verisimi 3y ago

Why are movies given tax breaks at all, is the question.

fred_is_fred 3y ago
I think this specifically is a write off, same as if you made 500,000 widgets and nobody bought them.
prepend 3y ago
It’s not specific for movies. All businesses only pay taxes on profit. And the expenses spent to produce things are a “tax break” to offset revenue. This is done because it’s hard to pay taxes if you don’t make a profit as your money is already spent on other stuff like resources, people, etc.

sib 3y ago

Since - as only one example of the complexity involved - the music used in the film is almost certainly licensed and must be paid for, and the studio does not "own" it, there's no way that they can simply release it for free distribution or put it into the public domain...

qingcharles 3y ago
And having had this issue myself with a Hollywood movie, where the rights for the music in the final cut were too expensive, trying to replace the music is always horrible. Especially, as in this case, where you would likely have to go with public domain music.

tpmoney 3y ago

That seems even worse for all the people affected doesn't it? Anyone who had residual contracts now not only gets nothing like they were before, but their work is still actually being distributed, even if the studio in question is getting nothing for it. I feel like the first court case we'd see after something like this would be all the actors suing some "Rejectflix" company that springs up to provide a curated streaming site for these things.