Record labels and independent film producers applauded congressional approval of a $136 billion corporate tax package that cuts taxes for businesses ranging from film companies to bow-and-arrow makers

WASHINGTON, D.C. -- Record labels and independent film producers applauded congressional approval of a $136 billion corporate tax package that cuts taxes for businesses ranging from film companies to bow-and-arrow makers.

The American Jobs Creation Act, two years in the making, was passed Oct. 11 and now goes to President Bush, who is expected to sign it into law.

The entertainment industry is specifically mentioned in the legislative summary of the bill written by the Joint Committee on Taxation. The provision "provides a reduced corporate tax rate for the portion of taxable income attributable to: (1) domestic production of certain property, including tangible personal property, computer software, films and videotape (other than certain sexually explicit productions); and sound recordings."

The legislation cuts the tax rate for "domestic production" businesses from 35% to 32%.

Annual tax savings for the U.S. record industry -- which had income last year of about $11.8 billion, according to the Recording Inudstry Assn. of America -- could be about $400 million.

For Hollywood, the massive overhaul of the corporate tax law is at best a mixed bag.

One measure gives independent filmmakers a tax credit for films and TV shows made in the United States that cost no more than $15 million generally or $20 million if they are made in the Mississippi Delta or other poor areas.

"While we haven't seen the final language of the bill in its entirety, we're incredibly gratified with this legislation," said Jean Prewitt, president/CEO of the Independent Film and Television Alliance. "Coupled with existing incentives at the state level, this represents a first step to making production in the U.S. more financially attractive to small independent producers and can have a positive impact on keeping jobs in America."