The Oscars are on Sunday, and all eight films nominated for best picture were produced in states or countries that offer taxpayer support to qualifying productions. But these film tax credits fail to generate enough jobs or tax revenue to be worthy of their cost.
“Every independent economic study of film tax credits has found that they lose money more than they gain,” Joe Henchman, the Vice President of Legal & State Projects at the Tax Foundation, told the Washington Examiner.
No independent study has found a state film tax credit to generate more than 30 cents for every dollar in lost revenue, according to a Tax Foundation list. “The credits are now so generous in the states that continue to have them that you’re not really cutting taxes, it’s more writing checks. You’re now paying companies far more than they could ever pay in taxes.”
32 state governments nationwide spend roughly $1.5 billion a year on film production tax credits. The number of states with film tax credits has declined from 40 states in 2010, but the remaining states are increasing the size of their credits, according to Henchman.
But, but, but …. They create jobs !!!
Film productions create jobs, but they are typically temporary, low-skilled jobs. High-skilled technicians, designers, and other staff usually travel with productions during filming, which generally lasts only weeks, not years.
The tax credits bring in more film productions than a state otherwise would. But is the lost revenue worth it if the effect on jobs and economic growth is minuscule? After all, that revenue could go toward schools, better roads, or be returned to the taxpayer. The chief benefit of film tax credits is the pride one might feel at having a movie filmed in one’s state — or perhaps a celebrity run-in as a movie star jets back to Hollywood.
Many states do not make information readily available on which productions get handouts, which makes it difficult to tell how large a tax credit some films receive. With limited transparency, it is hard for taxpayers to hold government film offices accountable.
The California Film Commission is remarkably transparent with its tax credit information. Its website conveniently lists every film and television production that receives a tax credit and precisely how much it received, along with other production information.
As I reported in January, “American Sniper” received a $6.8 million tax credit from California. That handout is bigger than the entire budgets for two other films nominated for best picture — “Whiplash” and “Boyhood.” “Whiplash” was also filmed in California, but did not receive a tax credit. “Boyhood” was filmed in Texas, but did not receive any production incentives from the Texas Film Commission.
The New York Governor’s Office for Motion Picture & Television Development did not immediately respond to an inquiry about how much “Birdman” received in subsidies.
As amusing as films and television are, the entertainment industry is not inherently more worthy of taxpayer support than other industries. That’s the argument for eliminating this tax credit and doing something else with the money.
Wilmington area legislators have been wringing their hands and gnashing their teeth about the elimination of film tax credits in North Carolina. That’s understandable. Their area is where most of the film action happens. Leftists have also joined in.
Some Wilmington area Democrats in the state House are trying to revive the state-level film incentives. THIS is while we are being told there is not enough money to pay for needed road improvements, and that we MUST pay more gas tax.