Why do cash-strapped states subsidize moviemakers?

By :: March 2nd, 2011

While states are trying to balance their budgets by cutting education and health care as well as aid to local governments, governors are fighting to protect truly important initiatives such as film industry tax credits.  In today’s LA Times, Michael Kinsley does a great job dissecting these boondoggles. He cites a nice paper by Bob Tannenwald of the Center on Budget and Policy Priorities, who found that in 2010, 43 states spent $1.5 billion on tax credits for TV and movie productions. Cash-strapped states race one another to the bottom by competing for film business even though there is little evidence that these subsidies generate either enough local jobs or offsetting tax revenues to break even, much less make money for states.  With a 2012 estimated budget gap of $125 billion, you’d think states would have better things to do with their scarce dollars than dole it out to Hollywood producers.