Hollywood Movies Are Being Punished If They Aren't Diverse Enough – Giant Freakin Robot

California film productions that do not reflect a proposed demographic diversity goal will lose 4 percent of their state tax credit.
By Charlene Badasie | Updated
Hollywood film studios will be punished if their projects don’t reflect the diversity of California’s demographics. Productions that fail to meet the proposed diversity goal will lose four percent of their tax credit allocation, Variety reports. The provision is part of a five-year extension of the region’s $330 million tax credit signed into law by Governor Gavin Newsom.
Hollywood productions that qualify for the tax credit must submit a work plan outlining their commitment to hiring a diverse cast and crew. Failure to make a “good faith effort” to meet this goal will result in the California Film Commission deducting four percent from their tax incentive. The state has always had a hiring incentive program for films.
Created in 2009, the bill initially aimed to prevent other states from “stealing” productions with their own incentives. But lawmakers have recently decided to use the program to promote Hollywood diversity, as the entertainment industry is whiter than California’s population.
In 2021, a new $150 million program was developed to encourage the construction of soundstages. That bill included a provision that awarded a four percent bonus for productions that met Hollywood diversity goals. Since California’s $330 million program expires in 2025, lawmakers began working on an extension that would be valid till 2030. The original plan was to adopt the diversity bonus from the soundstage credit, but that legislation stalled in 2022, Variety reports.
The latest version of the bill drops the bonus and provides for the four percent penalty if Hollywood projects don’t meet diversity goals. However, the fine is smaller than the bonus because it only applies to a credit allocation amount. The total amount of eligible production spending will not be affected. The Motion Picture Association has not objected to the new rules.
The tax penalty, which is in the early stage of the legislative process, also includes disabled folks as part of the required Hollywood diversity hires. Earlier versions only included race, ethnicity, and gender, which led to backlash from disability advocates. According to the state Legislative Analyst’s Office, the change to the Hollywood diversity bill will cost about $200 million.
The agency has been skeptical of the program, as research indicates a low return on investment. The office also concluded that extending the program would expand the overall economy or improve Hollywood diversity. “The film tax credit’s most likely impact appears to be increasing the motion picture industry’s share of California’s economy,” the report stated.
California’s new Hollywood diversity proposal is the latest example of introducing demographic quotas to entertainment. In 2022, the U.K.’s ITV set aside $105 million to assist production companies that promote more diverse content. “[We are] committed to creating content by and for everyone,” ITV Group Diversity and Inclusion Director Ade Rawcliffe said in a statement.
While the move might seem like a liberal political agenda, there’s nothing wrong with wanting to give a more diverse group of people a chance to tell their stories. An argument can be made for earning a spot due to merit, not race or gender. But this has failed mainly because racism and unconscious bias are deeply rooted in people. So more Hollywood diversity, as seen in The Little Mermaid, isn’t a bad thing.
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