By Sam Brunson
Back in the 1970s, film tax shelters were big enough that the Ways and Means Committee got a report on the subject.[fn1]
But the US wasn’t the only market that allowed for film tax shelters. In 1974, Canada raised its Capital Cost Allowance from 60% to 100%. Investors could deduct 100% of the money they put into Canadian-produced movies. How important was this increased deduction limitation? In 1974, only three movies were produced in Canada. In 1979, the number had increased to 77.
I had hoped to draw a line between “Cannibal Girls,” an early horror movie directed by Ivan Reitman, and “Ghostbusters,” which he also directed, as well as acted in. I’d then attribute Reitman’s directing career to the Canadian film tax shelter.
Unfortunately for my clever bloggy connection, it turns out “Cannibal Girls” came out a year before the increase of the Canadian Cost Allowance to 100%. Also, it only cost about $12,000 to make, so it wouldn’t have sheltered a ton of income.
The lack of a direct line between “Cannibal Girls” and “Ghostbusters” doesn’t mean taxes didn’t have any Halloween movie relevance, though. The 70s apparently saw a lot of Canadian B-movie horror movies, shot at least in part because they provided a deduction for investors in the movies. And, while most of those movies were forgettable (and, for that matter, most are forgotten), they did follow templates that are apparently still being used today.[fn2]
But I’m not entirely lost on finding a connection between Ghostbusters and taxes: it turns out the recent “Ghostbusters” reboot offset its budget with about $26.7 million in state tax credits for films shot in Massachusetts, or more than one-third of the tax credits provided by the state last year. So I can’t point to a direct tax story motivating the first “Ghostbusters,” but I can find one relating to the most recent incarnation.
So with that, happy Halloween! At Surly, we ain’t afraid of no ghost (taxes)!
[fn1] Basically, investors would borrow money, buy movies, and depreciate them quickly, accelerating the deductions while deferring income.
[fn2] I mean, I assume they are: I’m not the biggest watcher of horror films. Confession: in spite of being a kid in the 80s, I’ve never seen any of the big 80s slasher films.
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