Now, there’s plenty of room for us to kick ole Uwe around for being such a hack on this MB, but that’s not what I wondering here. Upon reading the article linked above it essentally makes the statement that Uwe Boll wants to make bad movies, and that failures are more profitable than successes under his system. I think that’s total bullshit, but I don’t have nearly the understanding of tax laws, especially German ones, to know for sure. What’s the real story here? [sup]1[/sup]
I can understand, that based on the fact that movie investments can be tax wrte-offs, that whether the movie succeeds or not is irrelevant. But it seems to me that if the movie happens to be profitable, while you might get stuck paying taxes on the profits, you’re still walking away with more than you put in.
The tax shelter theory explains why this hack is able to repeatedly get funding, being the only one smart enough to exploit these rich guys, but wouldn’t he still be better served to make good movies? Wouldn’t a good director making a good movie be a risk free chance for these rich guys to make even more money? Can someone debunk this article for me?
[sup]1 - I debated if this belonged in GQ or CS, if a mod wants to move it feel free[/sup]
Thing is, it’s really hard to make a good movie. Think of how many bad movies you’ve seen. Excepting Uwe Boll’s movies, every single one of them wanted to be good, but were unable to succeed for some reason. What’s worse, though, is that it’s even harder to make a succesful movie. The hell of it is, it’s almost impossible to guess what the public is going to want to see. Lots and lots of good movies do crap business at the box office. That’s why Hollywood makes so many carbon copies of its own movies. So many good movies do crap business at the box office, it’s easier and safer to just copy whatever else has done well.
On the other hand, it’s really, really easy to make a bad movie. In fact, most people end up doing it entirely by accident. Look at it this way: say I gave you a pen and paper and told you I’d give you ten bucks for a picture that looks exactly like an elephant, or five buck for a picture that looks nothing at all like an elephant. If you draw something that sort of looks like an elephant, you only get a buck. What’s the safest bet, there?
That’s what Boll does. Instead of trying to make a great movie, which will almost certainly only result in middling success, he sets out to make truly awful movies no one will see, knowing that this one loophole in German tax law will net him and his investors much larger returns than if the movie does average business and barely breaks even.
This is where I’m calling Bullshit. The implication is that a BAD movie is more profitable than a midlding one. This just doesn’t make any sense.
They can write off the tax break regardless of the movies results. An investment is an investment. Their tax burden decreases. However if that movie happens to make money, then they have to pay taxes on those profits. Yeah, their tax burden increases, but so does their earnings resulting in a net-positive.
I have no doubts that Boll is making money with crappy movies, and that it’s hard to make a successful one. But I simply can’t see there being a greater motivation to suck than to be average.
I admit, I barely understand the US tax code, let alone the German tax code, so I have to take the article with a certain amount of faith. But every movie Boll has ever made has lost money - a lot of it, too. There’s got to be some reason people keep investing in his movies.
Here’s the relevant portion of the article. Maybe someone whose financial acumen exceeds mine (and mine almost extends to the point where I can balance a checkbook, so it shouldn’t be any great feat to find one) can explain it more clearly:
AFAIK (and unfortunately I can’t remember where I read it or I’d cite) the loophole in the German tax laws that Boll’s movies take advantage of is being fixed so hopefully we’ll stop seeing his cinematic abortions being made. At least until he starts making them in Russia instead or something.
This is up there in dumb tax policy. Australia’s 10BA film scheme was bad, it’s infrastructure bond scheme was nuts, but this was insane (it’s kind of a combination of the two).
I understand Omniscient’s objection. Sure, you want the biggest deduction you can get and you want it now, and you want any money that comes along later. But why would you want a dog? And if you did, why not spray the actors with gold for every take and really ramp up the loss? I’m guessing the answer is quarrantining of loss offsets and risk, but I dunno.
The thing is, they don’t really sound like a tax “shelter”. The investors are still shelling out money. The only difference is that it’s to the film company, not the government. Even if it was one, I have to think there are easier tax shelters to implement than a full-blown motion picture.
I suspect Uwe Boll is one of those arrogant millionares like the ones who try to put on their own plays or open their own restaurants. They have money but not the talent so all they produce is a spectatular failure. Think Howard Hughes but sucking (his movies may have sucked but The Aviator seemed to imply that they did well).
Curiously enough, according to this article (30 March 2003, German-language, from a major German weekly paper, reprinted on the site of an association of costume designers/scenery designers) Uwe Boll pleaded for restricting tax advantages to domestically produced movies. (perhaps he didn’t work in Hollywood back then?).
The article also mentioned that it does not seem to be an intentionally legislated tax incentive scheme but rather an unintentional result of some more general tax accounting rules. (German tax law tends not to be so much ad hoc as in some other countries but rather to set general principles and logically progress from them, and the finance ministry has had a history at least in the last decade of engineering tax legislation to promote macroeconomic goals only to be blindsided by clever accountants to the tune of a few billions).
Also mentioned in the article: it was too early to tell on the performance of most German movie-production funds as they were too young to have arrived at the point where they had to repay their capital. The keyword cited in the text: stupid German money.
The article states that of the 156 movies nominated for the 2003 Oscars, 46 were made with German money. When that’s a thing of the past German dentists will have the consolation of still owning a large part of this planet’s ships (that’s another tax haven).