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M. Night Shyamalan: Change Pennsylvania’s movie tax credit, and film investment here would ‘explode’

M. Night Shyamalan said he knows of several productions that want to come here but can’t, and that if the state were to remove the cap, investment “would explode.”

M. Night Shyamalan calls the criticism he has encountered “a phenomenon,” saying: “It’s something that I’ve thought about forever. … It feels a little bit personal.”
M. Night Shyamalan calls the criticism he has encountered “a phenomenon,” saying: “It’s something that I’ve thought about forever. … It feels a little bit personal.”Read moreCourtesy Paramount Pictures Corp.

When aspiring filmmakers ask Glass director M. Night Shyamalan where to go for jobs, he tells them to choose the film hubs of Atlanta or Los Angeles over Philadelphia.

One of them, in fact, was his own nephew, a screenwriter and producer whom Shyamalan pointed to Georgia. There, uncapped state tax credits for film productions have created a stable, long-term industry where filmmakers know they can “earn a living and provide for their families.”

In Pennsylvania, he said, the impediment to that is the state’s film production tax credit, currently capped at $70 million — limiting Pennsylvania’s ability to lure TV and film production over the long term, and inhibiting the creation of infrastructure for a permanent, thriving industry. There are only enough tax credits to accommodate half-a-dozen large productions annually, and the credits are usually allocated in the first months, so producers can’t count on the credit being there for them year after year.

Shyamalan said he knows of several productions that want to come here but can’t, and that if the state were to remove the cap, investment “would explode.”

That was the point hammered home in a hearing Thursday, called by the House Democratic Policy Committee and held at the Museum of the American Revolution on South Third Street. Shyamalan was one of several witnesses drawn from the film and tourism industry who urged legislators to remove the cap from the tax credit, or at the very least expand the size of the credit.

Shyamalan said filmmakers choose to initiate long-term projects in Georgia because they know what their costs and expenses will be years down the road. He cited Tyler Perry, who’s built a production empire there.

“You have an equivalent of me in Georgia. You have Tyler Perry,” Shyamalan said. “Because you have someone who has the ability to make an almost unlimited amount of movies and television, but who has an uncapped [tax] situation, and my credit is capped yearly. So I can’t build the infrastructure, and he can.”

Shyamalan gave the example of the Apple TV series Servant, set to debut Nov. 28, that he recently filmed in Garnet Valley, Delaware County. He bought a warehouse and built the sound stages. An adjacent building came up for sale “and I wanted to buy it and expand into it ... but I didn’t, because I don’t know if [the series] will be here next year.”

He continued: “We hope to keep it in town, we hope the tax credit will be there, but that’s no way for anyone but a crazy person like me to build a life or run a business," said Shyamalan, who said the lack of a permanent filmmaking infrastructure is also a big talent drain.

He told the story of a young filmmaker named Dan Trachtenberg, who, as a kid, threw copies of his movies over the gates of Shyamalan’s Chester County home, hoping the director would watch them.

“He went on to be a successful filmmaker, making movies like 10 Cloverfield Lane,” he said. “He’s in Los Angeles now, but he should be in Philadelphia, hiring another 2,000 people.”

Shyamalan said he hears from crew members he has trained and nurtured, now working in Atlanta and Los Angeles, who want to come back here to work, but can’t because there aren’t enough jobs.

“These people were trained here,” he said. “They should stay here.”

Shyamalan testified alongside Sharon Pinkenson, executive director of the Greater Philadelphia Film Office, who said the state forgoes billions in investment by capping its credit.

“When a state has a significantly large or uncapped tax credit that doesn’t have to be renewed each year, investors and infrastructure flock to those states,” she said, citing Georgia’s estimate of its economic impact at $9.5 billion.

By contrast, over the life of the Pennsylvania tax credit program, $812 million in film production tax credits have been approved for roughly 500 projects, generating $3 billion in direct spending, said Carrie Fischer Lepore, deputy secretary of the state’s Department of Community and Economic Development.

However, in a 2013 report, Pennsylvania’s Independent Fiscal Office questioned the effectiveness of removing the tax-credit cap. The state would receive about 14 cents back for every dollar of film tax credits awarded if the credits had no cap, according to the report, which found that the tax revenue generated by economic activity from film productions would total between $7.5 million and $14.9 million, but the net fiscal impact to state government would range from a loss of $46 million to a loss of $93 million.

In 2019, at least three major theatrical and streaming releases — Shazam!, Harriet, and In the Shadow of the Moon — have been set in Philadelphia but filmed elsewhere. Asked how many of those movies would have been filmed here with a less restrictive tax credit, Pinkenson said: “All of them.”

Shyamalan said it’s no secret that Hollywood has a case of “sequel-itis,” and when a movie like Shazam! grosses $364 million, it’s a potential windfall for the city (Toronto, in this case) where it is produced.

“It did huge numbers, and they’re going to make a lot of sequels, but not here,” he said.

Pinkenson said the city is thrilled to be home to series like Jason Segal’s just-wrapped Dispatches From Elsewhere and Kate Winslet’s Mare of Easttown (to be filmed here beginning in November), but she said those series are “one-offs,” because they are only planned to last one year. The Holy Grail of the TV and film business — the long-running, multiyear series — will remain out of Pennsylvania’s grasp as long as the tax credit is capped, she said.

Shyamalan, Pinkenson, and others (the hearing also included testimony from Teamsters and SAG reps) stressed that the production money isn’t going to Hollywood. It stays in the state, and goes into the pockets of drivers, craftspeople, carpenters, makeup artists, tailors, dry cleaners, and the like.

She encouraged legislators to think of the small businesses that would be helped by a permanent filmmaking infrastructure, and not to think of movie production as a glamour business somehow more rarefied and less deserving than manufacturing.

“We are manufacturing,” she said. “We manufacture entertainment.”