As a Chicago City Council subcommittee explores new taxes and fees, including another property tax hike, a proven path to create revenue and even grow the tax base without more tax burden on business and residents was on display this weekend with the debut of Sundance x Chicago.
Featuring three days of artists’ programs, film screenings and events across the city, this event made Chicago the first U.S. city to host an independent artist and film weekend in partnership with the Sundance Institute outside of Park City, Utah.
What gave Chicago a competitive edge for Sundance x Chicago? The Illinois Film Production tax incentive continues to generate revenue, create jobs and provide career-building opportunities for local film talent. This incentive makes Illinois a prime destination for the Sundance Institute to advance its mission for the discovery and development of independent artists and audiences.
I’m proof. My debut feature film, “DESIGN,” was made in Chicago, funded largely by local investors and brought to the screen by one of the most experienced film crews in the country. “DESIGN” was an Official Selection of the Sundance Film Festival, toured the global film festival circuit and found an expanded audience in theatrical, broadcast and streaming distribution.
With that experience, I became one of the founding members of the Illinois Production Alliance, a nonprofit organization with membership from every aspect of media production in Illinois, including labor unions, professionals, vendors and educators.
In 2003, we worked with members of the Illinois General Assembly to explore ways for the state to compete for lucrative film and commercial production. This collaboration between government and industry produced a long-term vision to build the industry in Illinois with requirements for local hiring and diverse hiring practices. It also did something taxes rarely do — it engaged the industry in an effort to promote the state as a business destination.
The first film production tax incentive in Illinois took effect Jan. 1, 2004, as a tax credit of 25% of an accredited production’s qualified Illinois expenditures, plus an additional 10% of Illinois labor expenditures on employees from areas of high unemployment.
The incentive immediately attracted major studio productions such as “The Dark Knight,” as well as franchise television shows and advertisements. Other states, including Wisconsin, started getting in on the act and labored to match Illinois’ incentive.
Illinois government and industry kept working together to keep our competitive edge. In 2008, the legislature strengthened and expanded the incentive by increasing the film production tax credit to 30% of qualified Illinois production spending and an additional 15% of labor costs for employees from high-poverty or high-unemployment areas.
Annual updates by the Department of Commerce and Economic Opportunity show results worthy of the big screen. Film production spending in Illinois for 2022 was a record-breaking $691 million — a $131 million increase from 2019. This achievement came as Gov. J.B. Pritzker has championed and strengthened the incentive and extended the credit through 2033.
A recent report commissioned by the Illinois Production Alliance shows the state of Illinois averaged $404 million in direct production expenditure by Hollywood studios from 2012 to 2022 and a $6.81 return on investment for every dollar the state spends on the tax incentive. That revenue comes along with job creation.
The results include billions in extended economic benefits. Every time a movie, commercial or television show is filmed in Illinois, vendors and suppliers are engaged to provide lumber, security and other resources, and hotels and restaurants benefit from increased traffic from those working on the production and those who want to visit location where stories are told.
With the recent release of Season 3 of “The Bear” on streaming, Mr. Beef and other locations again are experiencing increased business. That’s a sales tax boost too.
The incentive has worked so well that the state is now supporting the build-out of a qualified talent pipeline through its Film and TV Workforce Training Program, focused on inclusion and diversity in the film industry. The inaugural class served more than 170 students at seven locations across the state in 2022. Eighty percent of program participants earned paid positions after graduation.
Those are benefits that give Illinois residents their big break into show business, as well as career-building opportunities to keep them here and grow our tax base.
Some of the ideas on the table for the City Council to increase revenue are concepts such as a head tax that would discourage hiring in Chicago by charging large businesses a per-employee fee. Perhaps City Hall will explore more business-building incentives to attract companies and jobs to Chicago and provide Chicagoans with lasting opportunities.
They can look to the film production credit incentive as a model.
John Digles is a Chicago-based independent movie producer and a founding member of the Illinois Production Alliance.
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