Have you ever seen a film or show and something about the location just felt off? More than likely, it's because the film's purported location didn't match where it was actually shot. Often, the reason is special crony tax handouts for Hollywood.
The film industry is widely recognized to be one of the most prolific lobbyists for and recipients of tax breaks and incentives from state and local governments, but putting an exact amount of the incentives has always been difficult. Now new data from New York illuminates the stunning scale of the handouts.
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Watch Full ScreenAccording to the New York Times, out of the total $1.2 billion in tax incentives provided by the Empire State in fiscal 2017, at least half went to the film industry.
What have the hardworking taxpayers of New York bought for more than $600 million? Far from revealing the kind of long-term economic development promised by the advocates of tax-incentive programs, this new data sheds light on the extent to which the money instead fuels transient and temporary economic activity.
Lobbyists and advocates for the tax credits want Americans to believe they create jobs and foster long-term economic development, but the fact that more than half of the benefits go to the film industry blows that argument out of the water. These jobs are notoriously transient. They're often short term, and they shift from location to location, following movie productions and film locations.
They don't build skyscrapers, factories, and storefronts. Instead they bring flocks of actors, cameramen and set designers who fly away like migratory birds as soon as they wrap up a project. A nonpartisan task force in Maryland, for example, recommended eliminating the state's film tax credit program in 2014 because the jobs produced were so temporary. In Michigan, a government study found that jobs associated with film tax credits lasted an average of 23 days.
Previous studies from Good Jobs First cast a dim view of the effectiveness of such programs for helping out the average family or small business. A study of similar programs by Good Jobs First in three other states found that nearly 70 percent of tax incentives go to large companies instead of small businesses.
No wonder people call it corporate welfare.
The lobbyists are running a racket. In every state they visit, they warn lawmakers that if film tax credits aren't continued, neighboring states will steal their business. They might tell an Arizona legislator that they're at risk of losing jobs to Nevada, while at the same time telling a Nevada lawmaker they're in danger of losing jobs to Arizona. Before either stops to ask what would happen if both stopped offering the tax credits, each falls for the same trick. The film industry benefits, and taxpayers lose.
States have put up with this charade for long enough. Instead of falling for the zero-sum narrative pushed by film lobbyists, state lawmakers should call their bluff. States such as Florida that are ending their film tax credits and finding that they are still attractive places to shoot a movie. Why should it be any different for New York City?
There are significant gains to be made from ignoring the calls of special interest groups to carve out benefits in the tax code. New Yorkers could have handed themselves more than half a billion dollars in tax cuts last year by eliminating film subsidies. The fact that they were instead saddled with the cost of paying people to shoot movies in one of the most iconic cities in the world – about as sensible as subsidizing lawn sprinklers in Seattle – is as laughable as it is appalling.
Special tax loopholes benefit almost no one. Simpler, fairer, and flatter tax codes, at the state as well as the federal level, benefit everyone.
Payton Alexander (@AlexanderPayton) is a senior policy analyst at Americans for Prosperity.
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