"About four or five years ago, we introduced legislation… It's hard to get legislation that benefits New York, but we worked and worked and worked, and we had a lot of help," Schumer said at a press conference held earlier this week on the 11th floor of Sardi's. "We got a lot of help from people across the country, and finally it has become law. What does it mean? Well, very simply — if you invest, which means you are creating jobs, you should be able to deduct that investment. Every other business can do it, but here, you couldn't invest until you realized profits, and as you know, it takes years sometimes before a Broadway show will make a profit, so it discouraged people from investing, and it discouraged people from producing.
"This is a good year for Broadway. We all know that; it's great. I take joy when I read the numbers of how many people have bought tickets, but they're not all good years, and in a sense, this is our insurance policy in a bad year, which we hope we never have! But, it's our insurance policy. It makes a great deal of sense, so I am really so glad to be here. I am so glad I was able to do this. It was a labor of love."
Matthew Morrison, Harvey Weinstein, Judith Light, Norm Lewis Join Senator Schumer to Celebrate the New Broadway Tax Package
As previously reported, the bill levels the playing field between New York-based theatrical productions and film and television shows. Current tax codes allow TV and film productions to expense up to $15 million in qualified costs, when 75 percent of compensation paid is for services performed in the United States. Broadway shows and other live theatrical productions did not previously qualify for the tax incentive.
The law allows 100 percent of an investment to be deducted by the investor from his or her income in the year of the investment. Beginning January 2016, all forms of entertainment media will be treated similarly by the IRS, essentially allowing producers to immediately recoup their investments prior to taxes being assessed on profits earned.
With the new law in place, investors and producers may be more willing to take risks — this could open the door for new works (like pieces such as Hamilton, which is not driven by a star or commercial concept), more productions and, possibly, more theatres. With more shows, producers will have to employ more actors, creatives and crew members. "This is so encouraging, for one thing, because it's the umbrella effect," said Norm Lewis, who was in attendance at Sardi's press conference. "It's going to [encourage] people to start writing more and create more and give them an opportunity to have [possible investors] see it… They're going to [think], 'Hmmm, maybe I can get behind this project,' and hopefully some new works will come along just like with Hamilton and Allegiance. [Those shows] were very lucky to get where they are because [investors and producers] saw that potential, but there are so many other great shows that are out there that if only they had the chance."
Prior to this legislation, Broadway investors were required to anticipate financial liability by creatively predicting a show's duration and income, which, in many cases, resulted in tax payments on unseen "profits" before producers earned back their initial investment. With a majority of Broadway shows closing before they recoup their investments, industry leaders felt that the theatre community faced an unfair disadvantage.
Kevin McCollum, who has ushered new (but risky) work to Broadway including Rent, Avenue Q and In the Heights, said, "I think the important thing is that it was always a disadvantage to invest in Broadway because sometimes you'd have to pay tax when you hadn't earned the money yet, and this eliminates that, so it incentivizes — it equals the playing field, making a fairer investment than it has been in the past… Anytime there's economic incentive, there's growth.
"More importantly, also, Broadway is now engaged, and I think, the federal government and every state benefits when there is live theatre because when you gather people in their community, you can build retail, you can build communities, you can build schools. And theatre is a great gathering in real time — in a time that technology continues to push us [away from social interaction] — [it creates] the need to congregate in real time and meet your neighbors. That's how you build better cities, so the live theatre is one of the most important American ethics, and now that I think the Congress and the legislative branches understand the importance of the theatre, I think more will come because there are so many benefits when people show up in their community.
"I think [the future of] Broadway has always been bright. The issue is [that] I wish we could have more theatres. I think, again, as technology pushes us, the need to show up in your community is more and more powerful because on the computer, it's called interactive, but the real interaction is going to a live event, and that's the power."
On Dec. 16, it was announced that British-based live-theatre company Ambassador Theatre Group (ATG) will reopen and operate the 1903 vintage Hudson Theatre on West 44th Street, east of Times Square, as a Broadway house. It has also been speculated that The Shubert Organization (which owns 17 of the 40 Broadway theatres) plans to build a state-of-the-art, 1,500-seat Broadway theatre between West 45th and 46th streets.
When asked at the Dec. 21 event if plans were still in place for a new Broadway house, Robert Wankel, chairman of the Broadway Theatre League and president of The Shubert Organization, said, "Well, who knows. Anything is possible. I can't say at the moment."
"The theatre — and particularly, the theatre in this town — is the cultural hub, and it expands all the way out to the rest of the country," said actress Judith Light. "As you know, the Broadway League has all these touring shows that go all over the country, and they are Broadway touring companies, and you also have a lot of people all around the country that are involved in this sort of work, so what's going to happen is that it's going to create jobs…
"I think we are very bright, but as the Senator said, this [tax package is] important in the years that we don't do as well as we are doing this year, and yes the numbers are great. You have shows that are on Broadway now — Fiddler opening last night, and it's gorgeous; and you have Hamilton, which is a paradigm shift in not only American theatre, but in theatre in general… So, what you have now is more possibility. You have a show like Fun Home winning the Tony last year. [These shows] are actually surprising people, and [they] bring people to whole other levels, so yes, I think the future is very bright, and I think that this makes it even brighter."