Visual Effects Society Calls for New California Tax Incentives

"I can eat the biscuits, but God made tigers carnivorous, so I must learn to catch fish. If I don't, I'm afraid his last meal would be a skinny vegetarian boy."

The honorary society of visual-effects artists also is calling for a "VFX Congress" to address issues facing its industry.

The Visual Effects Society, a global honorary society of the VFX industry, has sent an open letter to its membership that asks the state of California to create new tax incentives and called for a "VFX Congress" to explore other solutions to the problems facing the visual-effects industry.

Tuesday's letter followed a demonstration on Oscar Sunday that drew nearly 500 people representing the visual-effects community to Hollywood Boulevard to focus the film industry’s attention on the economic problems threatening visual-effects houses. While the industry has been grappling with problems for some time, those issues have received more attention since Rhythm & Hues -- the VFX studio behind the majority of the effects in Life of Pi, which won the visual effects Oscar -- filed for chapter 11 bankruptcy protection two weeks ago.

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VES did not organize the Oscar day demonstration, and as an honorary society, it does not have collective-bargaining power. But the open letter, signed by VES executive director Eric Roth, said the group intends to urge California Gov. Jerry Brown and the state Legislature to expand its tax-incentive program to include "a focused approach concentrated on the visual effects and postproduction sectors of the industry.”

"California will need to take action -- right now -- or we’ll lose many thousands more jobs and Hollywood will soon be the equivalent of an empty storefront," the letter reads. VES is asking its members to send letters to the Legislature and offers them a sample letter.

VES also plans to organize a VFX Congress to take place in the coming weeks “because we have reached a tipping point for the visual effects industry and there is much pent-up energy, anger and frustration right now.” Roth said “everyone” is invited and that VES is still working out details as to how to involve artists from around the world in the meeting.

The letter asserts that the VFX industry and the entertainment industry at large in California are in “serious jeopardy.”

Citing incentives offered by other states and countries, the letter states that California’s incentive program is “woefully inadequate” and that, as a result, "thousands of talented visual effects artists are joining the unemployment lines or becoming 'migrant film workers.' "

A portion of the letter also reads: “We know that there are some out there who are calling for the elimination of all subsidies and tax incentives everywhere around the world. We think that’s a great idea, and if there were a magic button that could be pressed to make that a reality, we would press it in a nanosecond.

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"But in today’s global economy, where many hundreds of localities around the world are feverishly devising new ways to make California’s piece of the entertainment pie smaller, the fact that California’s program doesn’t meet its current needs … is recklessly negligent to the thousands of visual effects professionals who are daily losing their jobs to other locales around the world. This not only hurts those artists, but also California’s economy.”

VES has made previous efforts to shed light on the industry problems. In 2011, it sent out an earlier open letter to the entertainment industry and proposed a VES Bill of Rights.

The complete text of the current letter follows:

VES OPEN LETTER – CALL TO ACTION

In light of current events, the Visual Effects Society (VES), an honorary body comprised of the very best visual effects artists around the world, today issues two calls to action:

First, we call upon Governor Brown and the State Legislature to immediately expand its tax incentive program for the entertainment industry and to include a focused approach concentrated on the visual effects and post production sectors of the industry.

Secondly, because we have reached a tipping point for the visual effects industry and there is much pent up energy, anger and frustration right now, the VES, under its good offices, is organizing a VFX Congress to take place within the next few weeks to allow all artists from around the world to share their concerns to find common ground on the issues that face us today. It is hoped that this effort will lead to a number of direct follow up actions that will gain consensus from visual effects artists everywhere. Everyone is invited and should attend.

As has become all too apparent over the past few years, and especially in the past few weeks regarding the status of Rhythm & Hues, Digital Domain, DreamWorks, and other visual effects facilities, the future for professionals who work in the visual effects industry – and the entertainment industry at large – in California is in serious jeopardy.

We certainly recognize that we live in a global economy and in fact, VES has members in 30 countries around the world. Many of those countries – and many states elsewhere in the US – offer aggressive tax incentives – which seek to lure visual effects work to their communities and away from our state. While California finally created a tax incentive program in 2009 (AB1069, Chapter 731, which was recently extended it to 2017), it is woefully inadequate to the needs of today’s entertainment industry. In effect, thousands of talented visual effects artists are joining the unemployment lines or becoming “migrant film workers”, chasing the work outside our borders because that’s where the jobs have been going and are still going.

The amazing irony is that while 47 of the top 50 films of all time[1] are visual effects driven and billions of dollars of profits are generated yearly, the actual people who create the work are becoming an endangered species in California. In short, Hollywood, the birthplace of all this art and commerce, is quickly becoming the land where creative dreams die on the vine and pink slips for dispossessed artists are being issued at an alarming rate.

We know that there are some out there who are calling for the elimination of all subsidies & tax incentives everywhere around the world. We think that’s a great idea and if there were a magic button that could be pressed to make that a reality, we would press it in a nanosecond. Why? Because California can compete with anyone, anywhere if there’s a level playing field.

But in today’s global economy, where many hundreds of localities around the world are feverishly devising new ways to make California’s piece of the entertainment pie smaller, the fact that California’s program doesn’t meet it’s current needs (it only allocates $100 million yearly … which meets the needs of only about 20% of the work that would stay in California otherwise. For comparison purposes, New York caps its program at $420 million yearly and both Louisiana and Georgia are uncapped in the amount of incentives they offer), and is recklessly negligent to the thousands of visual effects professionals who are daily losing their jobs to other locales around the world. This not only hurts those artists, but also California’s economy because thousands of good paying jobs wind up buttressing the economies of states and countries elsewhere and the technological advances that otherwise would be birthed in California are now taking root elsewhere.

According to a Milken Institute report from July 2010, commenting on the changing entertainment industry economy in California since 2008, their “research shows that if California had managed to retain the 40 percent share of North American employment it once enjoyed, 10,600 direct jobs would have been preserved here in 2008. Furthermore, those direct jobs would have had broader economic impact, generating an additional 25,500 jobs after rippling through other sectors. If the state had maintained its former level of dominance, a total of 36,000 jobs would have been saved, generating $2.4 billion in wages and $4.2 billion in output.”

But until such time as all tax incentives everywhere are a thing of the past, California will need to take action – right now – or we’ll lose many thousands more jobs and Hollywood will soon be the equivalent of an empty storefront.

If you support this call to action for a larger incentive program in California that matches the needs of filmmakers and would keep jobs here, then send letters to our state lawmakers that urges them to get to work immediately to increase our incentive program. See the sample letter below.

Additionally, for the benefit of our membership and visual effects professionals worldwide, we will work with our global VES Sections and others to promote a healthy and vibrant visual effects industry in every country where visual effects are created. It is for all of our worldwide colleagues – here in California and everywhere else – that we hope a VFX Congress can bring us all together in a truly meaningful way. Details of when and where the Congress will take place will be forthcoming. Together we can make amazing things happen.

As always, feel free to send us your comments at leadership@visualeffectssociety.com.

Respectfully,

Eric Roth

Executive Director

Visual Effects Society