After endless back and forth and a division in the House of Representatives, Congress finally voted Tuesday night to approve a Senate bill, avoiding the highly feared fiscal cliff. The vote was 257 to 167 and the first time Republicans effectively voted to raise income taxes in 20 years. We wonder why it took so long? We would not put it past the Democrats to have made some moves similar to the Lincoln GOP committee in order to make the deal. Beating the fiscal cliff meant resolving $600 billion in tax hikes and spending cuts, preventing a tax increase on 98 percent of Americans and 97 percent of small businesses. This means an extension of the Bush-era tax cuts for most taxpayers, but a $450,000 cut-off point for higher tax rates on earned and investment income for the richest Americans. It also extends long-term unemployment benefits that were set to expire.
Hollywood got a big break with Congress’ vote. Section 317 of the approved legislation includes an extension for “special expensing rules for certain film and television productions.” Congress first enacted production tax incentives favorable to the domestic entertainment industry in 2004, and extended them in 2008, but the deal was meant to expire in 2011. The original tax incentive applied to productions costing less than $15 million to make ($20 million in low-income areas). The 2008 extension applies to all films, up to a deduction of $15 million (or $20 million in low-income areas). The incentive is especially generous to television series as it applies to each TV episode.
