This is A First: Our Local Paper Actually Questions Movie Tax Incentives

I find that the local newspaper in most towns is generally a strong supporter of most every business relocation subsidy or tax incentive that comes along -- whether it be for Apple or an NHL team or a movie production, the local paper benefits from having more newsworthy activity in town.

But the AZ Republic actually ran an article this weekend questioning movie tax incentives, perhaps the only government subsidy dumber than buying sports stadiums for billionaires

States, including Arizona, that don't offer movie and television tax breaks usually are smart not to do so, a researcher contends.

Nearly all states have lured Hollywood productions at one time or another with special tax incentives, but a University of Southern California professor says such spending fails to deliver the long-term economic benefits promised by industry lobbyists and lawmakers.

“The subsidies are a bad investment," said Michael Thom, an assistant professor in USC's Price School of Public Policy, in a prepared  statement. "States pour millions of tax dollars into a program that offers little return."

Arizona doesn't currently offer tax incentives for the industry but spent $23.7 million on subsidies between 2005, when the program started, and 2010, when incentives ended amid a state budget crisis.

Thom, who has led two recent studies on the topic, looked at job growth, wage increases, entertainment-industry output and other factors for each state.  "On average, the only benefits were short-term wage gains, mostly to people who already work in the industry," he said. "Job growth was almost non-existent. Market share and industry output didn’t budge.”


  1. GoneWithTheWind:

    What bothers me most about the little Socialist who get elected to local and state governments is that it is things like this that convinces me that they do get it and fully understand that their taxes and regulations stifles capitalism. They "want" movie jobs and the attention it brings so they lower the taxes and I have no doubt they grease the skids around the regulations as well. But for a simple private business or big box store they don't care. Oregon is voting on measure 97 in November; a gross receipts tax, that will harm businesses and of course consumers. Make no mistakes those Marxists bastards in Salem know what they are doing and don't care. Hopefully the voter will have more common sense but if they do I haven't seen it lately.

  2. obloodyhell:

    Not to suggest I side with the incentive side, but...USC?

    You mean one of the two states with huge internal film businesses?

    Who would possibly encourage a professor in California to write a piece that pooh-poohs tax incentives that lead to people making movies... outside of California?

    And most importantly, "why?"


  3. markm:

    Movie tax incentives are crony capitalism, plain and simple. I live in Michigan, which has no real advantage for any movie that doesn't need Detroit (specifically) or the Mackinac bridge in the background, but has wasted a lot of money on trying to attract the movie industry. We have scenery: beaches, hardwood and evergreen forests, swamps, and farmland - but all that can be found on the west coast, and also mountains, deserts, ocean, and spectacular waterfront cliffs. If a decaying industrial city is needed, we have that and AFAIK CA doesn't - but every midwestern or east-coast state can provide a similar backdrop. And when natural light is important, Michigan is rather lacking.

    So, if the incentives are high enough, a movie company will fly in, shoot a movie, and leave. Restaurant and hotel owners have a very good season, but their businesses still have to survive when the movie people leave. Locals get jobs - as go-fers, food service, hotel staff, etc. None of these are good jobs - those are for the people with industry experience that fly in from Hollywood or NYC. They're not going to train locals when they're there for only 2 months. So the locals get _temporary_ low-paid, menial jobs. If they can stitch together more temporary jobs to total six months, they're qualified to draw unemployment for another six months.

    Of course, our politicians other main idea for creating Michigan jobs is just as bad: paying to advertise Michigan tourist destinations. It's better for the restaurant and hotel owners, because tourist season comes back every year. But I grew up in a town that lived on tourism, and most of the jobs are minimum wage, menial, and temporary or part-year. Rather than something you can live on, they're a supplement to welfare and unemployment pay. And they are especially bad in another way: tourists are often on their worst behavior. Hotel and restaurant staffs must put up with terrible treatment from customers. Beaches are left a mess. Emergency services are stretched rescuing boaters that ignored weather warnings or simply had no knowledge of how to operate the boat, swimmers who jump into the undertow, unprepared hikers, etc.

    It's fine for private enterprise to sell beaches and fishing to tourists, and scenery to movie companies. But when government takes money from other businesses to promote these industries, it is trading OK jobs for terrible jobs, and even running up the costs of other government programs: unemployment, welfare, search and rescue. And maybe _that_ is the real goal.