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.

7Comments

  1. Sid F.  ::  4:21 pm on March 2nd, 2011:

    And here is a report totally ignored by the media about a well known political activist who took advantage of a state subsidy for filming.

    “Sarah Palin’s Alaska,” the TLC reality show starring the former governor in her home state, will receive roughly $1.2 million in tax credits for filming in Alaska, the state says.

    Under a state subsidy created by the Legislature in 2008 and signed into law by Palin, Alaska allows film and TV producers to recover 30 percent or more of the money they spend on filming in the state.

    All told, the Palin show spent $3.6 million in Alaska, the state says.

    TV and movie-makers may not have tax liability in Alaska but they can sell the credits at a discount to corporations that do. The tax revenue would have otherwise gone into state coffers.”

    —adn.com Alaska Politics – Feb 18, 2011

    Now I am sure this subsidy was well justified. In fact, had the Alaska subsidy not existed Sarah Palin’s Alaska may well have been filmed in Kansas City.

    Of course, notice that while the tax credits cannot be used by Palin’s Company, they can be sold to those who can use them. Isn’t that like – wait for it – Cap and Trade?

    We need a new reality show: Sarah Palin – Closet Socialist

  2. Michael Bindner  ::  9:15 pm on March 2nd, 2011:

    Using government funds for ego gratification is not socialism, it is simply garden variety corruption.

  3. Sid F.  ::  7:38 am on March 3rd, 2011:

    I don’t call these activities Socialism, they do.

  4. jhonesmith540  ::  11:06 am on March 3rd, 2011:

    It sounds like you’re producing problems yourself by trying to solve this issue instead of looking at why their is a trouble in the first place

  5. Michael Bindner  ::  4:10 pm on March 3rd, 2011:

    Governors and Mayors want to do cameos.

  6. Paul Kunitzsch  ::  3:59 am on August 4th, 2011:

    I also agree with Michael Bindner

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