Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.
Can you guess who I had dinner with earlier this month? Denzel Washington. Well, not really, but he did sit at the restaurant table next to ours.
And guess who might get a welcome-t0-the-neighborhood casserole from the Moss family: Owen Wilson. I’m told if I play my cards right I might also get to hang out with other Hollywood A-listers like Vince Vaughn and Cuba Gooding Jr.
I’m not just name-dropping here. If you earn a lot of money, this sudden influx of movie stars could have a serious impact on your tax bill.
Georgia’s Entertainment Industry Investment Act of 2008 gives tax credits of up to 30 percent to companies “producing feature films, television series, music videos and commercials, as well as interactive games and animation,” in the state. ” Recipients of these credits often sell them to other Georgia taxpayers at 85-90 percent of face value, allowing the buyer to pay his or her Georgia tax bill at a discount.
A Georgia taxpayer with $500,000 in taxable income would have a state tax liability of about 6 percent, or $30,000. If that taxpayer instead bought $30,000 worth of “film credits” for 85 cents on the dollar and used them to pay his taxes, he would save $4,500. Hooray for Hollywood!
Obviously, these credits are most valuable to those with large state tax bills. Check with your CPA to see if they might be useful in your situation. (And note several firms around Georgia sell entertainment credits. I’m most familiar with Proscenium Capital Inc.)
Georgia’s willing to forego this tax revenue because the credit policy has drawn millions of dollars in entertainment-related business activity to the state. In 2007, before the credit was enacted, the entertainment industry had an economic impact in Georgia of $241 million. Today that figure is $2.4 billion — an 895 percent increase.
What’s more, the industry is becoming established in Georgia. Instead of landing an occasional three-month movie shoot, the state is seeing a steady stream of projects, including such TV series as AMC’s “The Walking Dead.” As a result, entertainment is becoming a true Georgia industry, one that employs people, creates wealth and generates tax revenue on an on-going basis. (Related links: Want to be an extra? A look at films shot in Georgia.)
So don’t be surprised if you see Lindsay Lohan shooting a film in your neighborhood, or Clint Eastwood at a Braves game. And if you have a blockbuster income year, ask your CPA if it makes sense to look into buying Georgia entertainment tax credits.
Fun question: Had any celebrity sightings of your own recently?
More serious question: Ideology aside, you see any downside to this tax policy?
– Wes Moss, for Atlanta Bargain Hunter