State tax incentives for filmmakers has opposite desired effect

Mar 23, 2010

Providing tax credit incentives to the movie industry to attract filming to non-traditional locations actually has a negative impact on state revenues, according to a study in the latest issue of the Journal of Planning Education and Research.

Many states offer producers tax-based subsidies to help finance film and television productions. Researchers explored the fiscal impacts of the subsidy programs, along with the methods used to calculate job creation and tourism impacts. Also studied was the potential for developing film and television industries outside Los Angeles and New York. The findings illuminate why policy makers need to carefully evaluate the methods used to rationalize public expenditures on incentives for economic development.

The researchers found that film subsidy programs:

  • reduce finite state funds usually allocated for other needs
  • benefit few citizens in one industry while leaving the tax burden to all taxpayers and other industries that are not subsidized
  • foster a race-to-the-bottom mentality where states continually up-the-ante to "remain competitive"
"The case of the entertainment media industries demonstrates the difficulties involved in sorting out competing claims and evaluating economic impact," write the authors Susan Christopherson and Ned Rightor. "Ultimately, close questioning of those claims may drive policy reform requiring data transparency and substantiation of economic development benefit. Meanwhile, however, the worldwide taxpayer-funded production financing 'gold rush' in entertainment media is still on."

Explore further: When shareholders exacerbate their own banks' crisis

More information: The article, "The Creative Economy as 'Big Business': Evaluating State Strategies to Lure Filmmakers," published in Journal of Planning Education and Research, is available free for a limited time at jpe.sagepub.com/cgi/reprint/29/3/336 .

add to favorites email to friend print save as pdf

Related Stories

Recommended for you

When shareholders exacerbate their own banks' crisis

Nov 21, 2014

Banks are increasingly issuing 'CoCo' bonds to boost the levels of equity they hold. In a crisis situation, bondholders are forced to convert these bonds into a bank's equity. To date, such bonds have been ...

Trouble with your boss? Own it

Nov 21, 2014

Don't get along with your boss? Your job performance may actually improve if the two of you can come to grips with the poor relationship.

Ethnic diversity reduces risk of market bubbles

Nov 18, 2014

If they consider it at all, investors likely regard ethnic diversity as a matter of social policy. But new research by an MIT Sloan professor suggests a much more practical reason to consider diversity: compared ...

User comments : 1

Adjust slider to filter visible comments by rank

Display comments: newest first

poof
not rated yet Mar 23, 2010
gold rush? lol, have they even read one of the requirement lists for those programs? You'd spend more on accounting than you would save doing one of these, plus all the asinine rules of having to use locals when union rules prevent the hiring of scabs, well good luck finding unionized film industry workers in places with no film industry. The states should be offering no-restriction tax incentives for the honor of being part of a movie.

Oh, and FYI, theres a little disclaimer in each one of these programs that the state can deny the rebate if they find one reason to, which pretty much means they will.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.