Saturday, March 26, 2011
Tax Incentives for Movies: A Losing Proposition for the States
Because the interests of the producers and the states are diametrically opposed—the former vying for bigger incentives and the latter for greater returns on their investment—aggressive competition among the states favors the producers to the detriment of the states. If competition presists (or increases) it may even become a challenge to hold on to the gains already made, let alone succssfully build entirely new industries. States must recognize that such competition is economically detrimental to them, and that while big productions can infuse large sums of money into a local economy, better uses for state funds, which may produce greaters returns on their investment, may exist.
A counter example that shows state tax subsidies for movies does work is the recent "reality" series with Sarah Palin in Alaska. Here is the report from ADN
"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."
Now it is quite clear that without this tax subsidy, the show Sarah Palin's Alaska would have been filmed in Cincinnati, or possibly St. Louis, Phoenix or even Florida.
Another great thing about the Alaska program signed by Palin is that the Tax Credits can be sold if they cannot be used. Doesn't this sound a lot like . . . wait for it . . . Cap and Trade?
Sarah Palin, Closet Socialist.
Read more: http://community.adn.com/adn/node/155814#ixzz1HjGFurCK
Posted by: Sid (real one) | Mar 26, 2011 10:53:24 AM