Are film tax credits worth it? A new reports suggests it's just a waste of money.
Nowadays, every major motion picture has received some sort of tax credits in order to produce their movies. From Ant-Man to Iron Man 3, movie studios are heading to states and countries that use tax payers money in order to produce their productions.
“Pure and simple: film and tax incentives create jobs, expand revenue pools and stimulate local economies.”
Supporters of film tax credits argue that tax credits provide higher paying jobs for locals and the credits incentives pay for themselves by boosting the economy and increasing government revenues. In fact, the MPAA (Motion Picture Association of America) says “Pure and simple: film and tax incentives create jobs, expand revenue pools and stimulate local economies.”
But, according to a scathing report by the Wall Street Journal, tax incentives are essentially a waste of money and hurt the people they are supposed to help. The WSJ points to a 2010 study that found that “State film subsidies are a wasteful, ineffective, and unfair instrument of economic development.”
“State film subsidies are a wasteful, ineffective, and unfair instrument of economic development.”
Another study in 2014 by the North Carolina General Assembly's Fiscal Research Division found that a large percentage of the film tax credits were wasted: “For every dollar North Carolina allocates to the state film production credit it loses 54 cents.”
Here's where it gets worse.
It would be more sensible to give 100 unemployed people briefcases with $100,000 in cash.
From The Wall Street Journal:
The jobs picture was bleaker. Looking at 2011, the Fiscal Research Division found $30 million in credits created 55 to 70 new jobs with a total payroll of $2 million.
State taxpayers forked over between $429,000 and $545,000 a job, and these positions paid an average salary of $36,000 a year.
It would be more sensible to give 100 unemployed people briefcases with $100,000 in cash.
A study by the Florida Office of Economic and Demographic Research found “it produced a measly 43-cent return on every dollar spent. And the jobs that were “created” were temporary, including many out-of-state fly-ins.”
To add insult to injury, Florida's and North Carolina tax credit program were among the most successful in the country. Here's a break down of the return on investment for every state's film tax credit program:
