AS HOLLYWOOD THREATENS TO BOYCOTT SHOOTING IN GEORGIA AND OTHER ANTI-ABORTION STATES, I’M REMINDED ON THIS WSJ PIECE OF MINE ON WHY PURSUING HOLLYWOOD IS FOR CHUMPS ANYWAY: The Hollywood Tax Story They Won’t Tell at the Oscars: It’s easy to demand higher levies on the ‘rich’ when your own industry gets $1.5 billion in government handouts.
With campaign season over, you’re not likely to hear stars bringing up taxes at this weekend’s Academy Awards show. But the tax man ought to come out and take a bow anyway. Of the nine “Best Picture” nominees in 2012, for example, five were filmed on location in states where the production company received financial incentives, including “The Help” (in Mississippi) and “Moneyball” (in California). Virginia gave $3.5 million to this year’s Oscar-nominated “Lincoln.”
Such state incentives are widespread, and often substantial, but they don’t do much to attract jobs. About $1.5 billion in tax credits and exemptions, grants, waived fees and other financial inducements went to the film industry in 2010, according to data analyzed by the Center on Budget and Policy Priorities. Politicians like to offer this largess because they get photo-ops with celebrities, but the economic payoff is minuscule. George Mason University’s Adam Thierer has called this “a growing cronyism fiasco” and noted that the number of states involved skyrocketed to 45 in 2009 from five in 2002.
In its 2012 study “State Film Studies: Not Much Bang For Too Many Bucks,” the Center on Budget and Policy Priorities found that film-related jobs tend to go to out-of-staters who jet in, then leave. “The revenue generated by economic activity induced by film subsidies,” the study notes, “falls far short of the subsidies’ direct costs to the state. To balance its budget, the state must therefore cut spending or raise revenues elsewhere, dampening the subsidies’ positive economic impact.”
Sometimes it is even worse, as demonstrated by Michigan’s effort, begun under former Gov. Jennifer Granholm, to woo the motion picture industry with an expensive state-of-the-art studio facility built on the site of a former General Motors factory in Pontiac. State leaders ballyhooed the plan as a way of moving from old-style industry to new. . . .
Despite tens of millions of dollars in state investment, the promised 3,000-plus jobs didn’t appear. As the Detroit Free Press reported last year, the studio employed only 15-20 people. That isn’t boffo. That’s a bust. The studio has defaulted on interest payments on state-issued bonds, and the guarantors—the state’s already stressed pension funds—may wind up holding the bag. “In retrospect, it was a mistake,” conceded Robert Kleine, the former state treasurer who signed off on the plans in 2010. . . .
The $1.5 billion in subsidies that states provide, according to the Center on Budget and Policy Priorities, “would have paid for the salaries of 23,500 middle school teachers, 26,600 firefighters, and 22,800 police patrol officers.” Or it could have gone to cut taxes on small businesses, which, as Ms. Longoria noted in her DNC speech, produce two out of three jobs in the economy.
In her words: “It’s the suburban dad who realizes his neighborhood needs a dry cleaner. It’s the Latina nurse whose block needs a health clinic—and she knows she’s the one to open it! It’s the high school sophomore who is building Facebook’s competitor. They are the entrepreneurs driving the American economy.”
And they are the people who aren’t receiving the kind of special tax treatment that states dole out to Hollywood.