Paul L. Caron
Dean





Thursday, January 14, 2010

Tax Foundation Blasts State Film Tax Credits

The Tax Foundation today released a new study, Film Tax Credits, Production Incentives Fail to Spur Economic Growth; State Tax Codes Should Provide Welcome Mat for All Industries, Not Holloywood Handouts:

All eyes in Hollywood may be focused on Sunday’s Golden Globe Awards, but a new Tax Foundation report [Movie Production Incentives: Blockbuster Support for Lackluster Policy] highlights a different kind of red carpet: the preferential tax treatment given to film production companies by state governments. Movie production incentives (MPIs) – such as film tax credits, cash rebates, grants and select tax exemptions – fail to spur economic growth or raise tax revenue, according to the study.

“Motion picture incentives are often touted as ‘job-creating’ programs, but they create mostly temporary positions with limited upward mobility,” said Tax Foundation Adjunct Scholar William Luther, who authored the report. “The only thing these incentives create is the need for ongoing credits and subsidies. As other states sweeten their incentives, productions move on.” ...

Currently, 44 states, the District of Columbia and Puerto Rico offer significant movie production incentives, up from five states in 2002. Of those, 28 states and Puerto Rico offer tax credits for film production – credits that are refundable in 15 of those states. Eighteen states offer direct cash rebates to production companies, and Texas, Tennessee and the District of Columbia offer grants to filmmakers. In addition to tax credits, cash rebates and grants, film production companies receive other preferential tax treatment: 30 state offer sales tax exemptions, and six states offer fee-free locations for the use of police officers to stop traffic.

Some states are suspending their MPI programs due to budget pressures and revelations of mismanagement.

https://taxprof.typepad.com/taxprof_blog/2010/01/tax-foundation-blasts-.html

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