A coalition of 120 business and organizations, including Port Chester’s Capitol Theatre, back a bill that would provide tax credits for 20 percent of music production expenses, including the advances on royalties that producers, engineers and songwriters are paid.

With New York’s film and television industry flush with its $420 million tax-credit program, state music industry moguls say they want $60 million a year from taxpayers to boost their own market share.

A coalition of 120 business and organizations, including Port Chester’s Capitol Theatre, back a bill that would provide tax credits for 20 percent of music production expenses, including the advances on royalties that producers, engineers and songwriters are paid. Other qualified costs include marketing and consultant fees incurred to launch a project.

If the tax credits exceed a company’s tax liability, then the state would cut a check. The Empire State Music Production Tax Credit is sponsored by Assemblyman Joe Lentol, D-Brooklyn, and state Sen. Martin Golden, R-Brooklyn, who represent districts in the heart of the city’s vibrant music scene.

Justin Kalifowitz, co-founder of New York is Music, and CEO of Downtown Music Publishing, says the tax credit is need to bolster an industry that he says has lost clientele to studios in Nashville, Atlanta and New Orleans.

“New York used to be a principal destination, but over the years, that has waned,” he said. “People are looking elsewhere from a cost perspective.”

The bill, introduced in 2014, never made it out of committee, so its proponents have reached out to leaders in the music world for guidance in adapting the proposal. .

Critics, though, say, this kind of tax-credit program is a bad idea.

“It’s an organized stick-up, inspired by the film industry,” said E.J. McMahon, president of the Empire Center for Public Policy. “We end up subsidizing a favored industry, and we will end up paying them to make their music here.”

Peter Denenberg, co-owner of Acme Recording Studios in Mamaroneck, said he’d welcome the tax-credit program. He said the money he spends on music recordings that would qualify for the tax credit are the expenses his accountant deducts from his company’s income to lower its state tax liability, which Denenberg acknowledged was not very high.

That means Acme would most likely get a check from the state of New York.

“That’s an incentive to do business in New York, for sure,” said Denenberg, chair of Purchase College’s studio production program. “Getting 20 percent kicked back – that’s really nice.”

Kalifowitz argues that New York needs the program to keep pace with other states, which he claims are luring away artists with their own tax deals. That’s the same argument used by the New York film industry after states like Michigan began sweetening the pot to bring film and TV projects to the Midwest.

Both the bill’s memo explaining the proposal and Kalifowitz point to existing tax-credit programs for music production in Louisiana, Tennessee and Georgia. Louisiana offers a 30 percent tax credit for music production, but Tennessee and Georgia only provide tax credits for music associated with film or television projects.

In the Lower Hudson Valley, small production studios have popped across the region, such as The Loft Recording Studios in Bronxville, Barrel House Recording Studio in Nyack, and Don Grossinger Mastering in Dobbs Ferry.

Grossinger, whose company provides the finishing touches on recordings before they are produced as CDs, vinyl records or digital downloads, said the tax credit could give New York businesses like his a competitive advantage.

“We could use the help,” said Grossinger, who has worked on recordings for the Rolling Stones, Jay-Z, Kelly Clarkson and the B-52s.

Tax Watch recently stopped by Sweatshop Studios in Katonah to talk about the tax credit with Shaul Dover, who built his state-of-the-art facility six years ago. Dover, who has worked on projects with Westchester musical greats Rob Thomas of Matchbox 20 and Paul Shaffer of the David Letterman show, had just completed work on a new recording by Peekskill guitarist Brian Conigliaro.

He has plenty of capacity for more work, but isn’t certain a tax credit would bring artists into the woods on Mount Holly Road to make their next recording. He’d rather have the state invest in a system to link artists to studios like his. He fears that the tax credit would favor New York City studios — especially those in Brooklyn where the bill’s sponsors reside.

Lentol says he’s intent on developing the proposal in ways that would serve all New York recording studios.

“The bill is a work in progress,” said Lentol. “We want it to help all segments of the industry, statewide.”

© 2014 Poughkeepsie Journal

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The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.