Gov. Gavin Newsom unveiled a proposal Sunday to more than double the annual amount of money allocated to California’s film and TV tax credit program as Hollywood struggles to compete with other production hubs dangling lofty incentives.

The governor declared his intent to expand the annual tax credit to $750 million, up from its current total of $330 million, which would make California the top state for capped film incentive programs, surpassing even New York. If approved by the Legislature, the increase could take effect as early as July 2025.

“California is the entertainment capital of the world, rooted in decades of creativity, innovation, and unparalleled talent,” Newsom said in a statement. “Expanding this program will help keep production here at home, generate thousands of good-paying jobs, and strengthen the vital link between our communities and the state’s iconic film and TV industry.”

The announcement comes as Newsom and other elected officials have been under increasing pressure to act as Hollywood production struggles to rebound after the pandemic and last year’s dual strikes by writers and actors.

Productions have increasingly opted to film in other states due to higher tax incentives, putting a damper on California’s signature film and TV industry. Underscoring the state’s competitive disadvantage, about 71% of projects that were rejected by California’s film and TV tax credit program chose to film out of state, the governor’s office said.

California’s film and TV tax credit program was established in 2009 as a way to prevent film and TV production from fleeing to other states. Back then, the credit was restricted to $100 million per year.

Five years later, the roof was raised to $330 million a year, awarding studios tax credits of up to 25% to offset qualified production costs such as set construction, stunt equipment and wages for crew members. The credit can be applied to any tax liability companies have in California.

In 2023, Newsom extended that version of the program for another five years and added a “refundable” feature entitling studios to cash payments from the state when their credits exceed their tax bills.

Although Newsom’s Sunday proposal would represent a substantial increase in funding, it doesn’t remove other restrictions in the state’s incentive program, including a provision that excludes the salaries of actors and other above-the-line costs that are a big portion of film budgets. Georgia and other rivals do not have such restrictions.

But such a move is considered politically untenable in California, where the film incentive program has faced opposition from critics who argue that subsidizing entertainment comes at the expense of other worthy causes, such as education and healthcare.

Members of Los Angeles’ entertainment community have recently been urging the government to pump more funds into the film and TV tax credit program in order to curb so-called runaway production and stimulate jobs.

As previously reported by The Times, industry insiders and experts overwhelmingly agree that relatively weak incentives are the main reason California is losing significant ground to Georgia, New York, Canada, the United Kingdom and other filming hot spots around the world.

New York’s film and TV tax credit program, for example, is capped at $700 million; and Georgia — a popular production destination for Marvel and Netflix — doesn’t have a limit at all.

“I believe the best filmmakers in the world are right here in Los Angeles, but it’s being outsourced because of the tax credits,” Mike DeLorenzo, president of Santa Clarita Studios, told The Times last month.

The sluggish activity in Southern California has been fueled by other factors as well, notably an overall pullback in production that reached a peak during the so-called streaming wars and cost-cutting by the major media companies.

Earlier this month, Los Angeles film permit office FilmLA reported that production levels in the area fell by 5% in the third quarter of 2024 compared with the same stretch in 2023, when scripted production came to a near standstill because of the Hollywood strikes.

Times staff writer Stacy Perman contributed to this report.

If former President Trump is reelected and follows through with his promise to slap new tariffs on all imports to the U.S., experts say much of the global economy could be upended. And few countries would be more vulnerable than Mexico.

The economy here is driven almost exclusively by trade, with 83% of exports sent north of the border.

Mexicans are watching the U.S. election anxiously, and bracing for a possible Trump victory over the Democratic nominee, Vice President Kalama Harris. Last week, the peso lost value after polling showed that the former president had taken a slight lead in several swing states.

Economists warn that even a small increase in tariffs on Mexico’s goods could lead to a rise in unemployment and poverty, and some say that could prompt more people to migrate to the United States.

“Even the threat of tariffs will create havoc,” said Juan Carlos Moreno-Brid, an economics professor at the National Autonomous University of Mexico. “It will further reduce Mexico’s long-term economic growth. And it could drive migration to the United States and Canada.”

Few world economies are more tightly bound than those of the U.S. and Mexico.

In 2023, U.S. exports of goods and services to Mexico totaled $367 billion and imports from Mexico exceeded $529 billion, according to the U.S. Department of Commerce. Mexico is the United States’ largest trading partner, having overtaken China in 2021.

Trump, who has long complained about the exodus of manufacturing jobs from the U.S. to countries such as China and Mexico, says that tariffs will help lure factories back to the United States.

Economists, though, are largely skeptical of that claim. And there’s some evidence that higher tariffs enacted during his presidency have cost American jobs. Many warn that U.S. companies would end up absorbing much of the new taxes, a cost they would pass on to U.S. consumers.

Some economists predict a 20% tariff imposed by Trump would end up costing the average U.S. family $2,600 each year. Harris says it could be higher, adding nearly $4,000 a year to the typical household’s bills, an increase she calls a “Trump sales tax.”

It’s difficult to say exactly what new tariffs would mean for the U.S. and the rest of the world because Trump’s proposals keep changing.

He has vowed, at various points, to impose an across-the-board tax of 10% or 20% on all goods entering the U.S. He’s also threatened tariffs of 60% or higher on imports from China.

In an interview this month with Fox News, he threatened to impose an exorbitant tax on autos imported from Mexico. A big chunk of U.S.-Mexico trade involves cars and auto parts that are transported back and forth across the border for production and final assembly.

“All I’m doing is saying, I’ll put 200[%] or 500%, I don’t care,” Trump said. “I’ll put a number where they can’t sell one car.”

New tariffs could trigger global trade wars because countries would probably retaliate with their own taxes on U.S. imports, targeting in particular farm goods because of the politically sensitive nature of that sector. The International Monetary Fund predicts growth would decelerate worldwide.

Donald Trump has vowed to impose a tariff of 10% or 20% on all goods entering the U.S. and threatened an exorbitant tax on autos imported from Mexico: “I’ll put 200[%] or 500%, I don’t care.”

(Rebecca Blackwell / Associated Press)

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But countries such as Mexico, which relies heavily on exports for economic growth, would be especially affected.

The value of Mexico’s exports and imports amounts to almost 90% of the country’s gross domestic product, according to World Bank data. Economists warn that even a small increase in tariffs on goods destined to the U.S. poses serious risks for the economy.

“Under the worst-case scenario, the Mexican economy will fall into recession, the currency will depreciate, and inflation will rise,” reads a report released this month by the economic research firm Moody’s Analytics.

The mere threat of tariffs has already scared off foreign companies from investing in Mexico. Tesla, for example, announced that it was pausing plans to build a new factory in Mexico until after the election because of Trump’s vow to levy taxes against auto imports.

Trump appears willing to target individual companies doing business here, recently threatening 200% tariffs on John Deere if the tractor manufacturer moves production and jobs to Mexico.

“The threat of tariffs and the erratic nature in which Trump might deploy them doesn’t offer any investment certainty,” said Rodrigo Aguilera, an independent economist.

As president, Trump in 2018 imposed tariffs on steel from Mexico and other countries, prompting counter-tariffs on American farm goods and straining U.S.-Mexico relations.

He also threatened broader tariffs on all Mexican goods, but backed off after American business leaders complained that it would hurt them and his administration extracted a promise from Mexican authorities to do more to stop migrants from reaching the U.S. border.

Some Mexican officials have said they don’t believe Trump will follow through with his tariff threats, which aren’t popular in the U.S. and seen as counterproductive for the American economy.

Marcelo Ebrard, Mexico’s economy secretary, told journalists recently that he believes they are just a campaign tactic. “The United States economy is not a manufacturing economy,” Ebrard said. “And I’m sorry, but it will not be that way again.”

But others fear that Trump, if he wins a second presidency, will be more likely to take dramatic measures on an array of policies because it is likely he would be surrounded by more loyalists.

“Trump is not going to be moderated by more moderate conservatives,” said Pamela K. Starr, a professor of international relations at USC. “The second presidency, I think, will be Trump unleashed.”

Rodrigo Aguilera, an independent economist, said there is no doubt that Trump will “use a tariff threat to force Mexico to collaborate on something he wants, on migration policy or security policy.”

“Mexico,” he said, “will have to try to capitulate.”

If Trump enacts tariffs on Mexico, it would be in violation of the U.S.-Mexico-Canada Agreement, a 2020 treaty that replaced the Clinton-era North American Free Trade Agreement. The new treaty, which Trump helped negotiate, calls for generally no tariffs on trade on the North American continent. If the U.S. violated the agreement, Mexico would have permission to retaliate.

When they overlapped in office, Trump and former President Andrés Manuel López Obrador came to an unexpected detente. López Obrador said the two countries’ relationship was built on mutual respect, and famously called Trump “a friend.”

Many think such a relationship may be less likely with the country’s new president, Claudia Sheinbaum, and Trump, in part because he doesn’t have a good track record of working with female heads of state.

“She’s really smart and a woman, all things that Trump seems to find threatening,” Starr said.

Sheinbaum has largely refrained from commenting on Trump’s tariff threats, except to say that it is the U.S., as much as Mexico, that would suffer if they came to pass.

Free trade, she said recently, “is as important for the United States as it is for Mexico.”

Sheinbaum, who took office this month, inherited an economy that was already on shaky ground. The country faces its largest budget deficit since the 1980s. And while the social programs carried out by her predecessor helped lift some Mexicans from poverty, 36% of the population is still poor, with 7% living in extreme poverty.

Recent developments in domestic politics in Mexico have spooked some investors. Business groups have criticized an ongoing plan to overhaul Mexico’s justice system, which some say will undermine the independence of judges.

In Mexico and much of Latin America, poverty has a direct link to immigration. A severe recession in Mexico in the 1990s contributed to some 5 million Mexicans immigrating to the U.S.

Times staff writer Don Lee contributed to this report.

If you’re a physician and a neighbor asks you a medical question, you’re probably happy to share your professional expertise. If you’re a heating and cooling contractor and a friend asks you about her furnace, you likely do the same. In that spirit, I think it’s time for business people to share what we know about immigration: that it powers economic growth and provides many other benefits to the country.

At a time when many politicians are falsely scapegoating immigration for society’s ills — crime, housing shortages, labor issues and more — people with experience working alongside immigrants, employing them and relying on them for the success of their business should speak up and set the record straight.

If that description fits you, here are some handy talking points:

• The United States has plenty of unfilled jobs. The Inflation Reduction Act and the CHIPS and Science Act, both signed by President Biden in 2022, offered incentives for firms to create manufacturing jobs. As of July, the country faces unprecedented labor shortages: The U.S. Chamber of Commerce reports 8 million job openings, substantially more than the total number of unemployed workers, about 6.8 million.
• Immigrants act more as “job creators” than as “job takers.” A 2020 study published by the National Bureau of Economic Research found that immigrants create jobs and enhance the economy for native-born workers. Foreign-born founders — including Google co-founder Sergey Brin (Russia), Intel co-founder Andrew Grove (Hungary) and Facebook co-founder Eduardo Saverin (Brazil) — play pivotal roles in high-growth entrepreneurship. Because immigrants found companies at a higher rate than native-born Americans, they create more jobs than they take.
• Immigrants often fill jobs U.S. citizens don’t want. Most native-born Americans eschew low-paying, physically demanding work in agriculture, construction and food production and processing. Immigrants play a crucial role in supplying workers in these sectors, allowing employers to fill jobs without overheating the economy or accelerating inflation.
• Higher-skilled immigrant workers contribute to innovation and the workforce, boosting productivity. A study of U.S. patents granted from 1990 through 2015 found that immigrants made up 16% of U.S. inventors and produced 23% of innovation output.
• Immigrants are less likely to engage in criminal behavior than U.S.-born citizens. A recent study based on data from 1870 to 2020 found consistently lower incarceration rates among immigrants. Moreover, immigrant incarceration rates have declined since 1960 compared with those of native-born Americans: Today immigrants are 60% less likely to be incarcerated than their U.S.-born counterparts. The recent surge of immigration across the U.S.-Mexico border has not been accompanied by a corresponding increase in crime rates in sanctuary cities such as New York and Denver.
• “Zero sum” notions of a fixed number of American jobs are simply false. The more people work and spend their wages, the more our economy grows and provides jobs for everyone, regardless of where they were born. According to a July Congressional Budget Office report, an increase in immigration from 2021 through 2026 is projected to boost federal revenues as well as spending. This is expected to lower federal deficits by a net $900 billion over the next decade, primarily because new arrivals work, pay taxes and stimulate economic growth, increasing incomes and tax revenues for everyone. That will boost the gross domestic product by $9 trillion by increasing population, labor force participation and productivity.

Most business people who rely on American labor and consumers are well aware of many of these forces. They know that expelling immigrants would shrink the U.S. economy and make it less competitive with other nations.

We know the consequences of immigration bans from experience dating to the Chinese Exclusion Act of 1882, enacted in an era of racial violence such as the 1871 massacre that killed 19 in Los Angeles’ Chinatown. A recent study showed that the act not only significantly reduced the number of Chinese workers of all skill levels in the country but also diminished the quality of jobs held by white and U.S.-born workers, the intended beneficiaries of the law. It led to a 62% decline in manufacturing output and hindered economic growth in the Western states most affected by the law for the next 50 years.

As a proud U.S. citizen who immigrated to the country in 1981, I urge other Americans who understand business and the economy to spread the good word about immigration.

Christopher Tang is a university distinguished professor at the UCLA Anderson School of Management.