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发帖数: 29846 | 1 By Eileen Norcross
April 16, 2013
Eileen Norcross is a senior research fellow with the Mercatus Center at
George Mason University, and lead researcher for the Mercatus Center's State
and Local Policy Project.
From Massachusetts to North Carolina, Michigan and Iowa, a similar picture
is emerging: Film tax credits don't deliver to state economies what they
cost to treasuries and taxpayers.
But against all evidence, the allure of bringing Hollywood to their hometown
is strong for policymakers. Last week, Governor Martin O'Malley signed
legislation to triple Maryland's film tax credit program from $7.5 million
to $25 million for production companies that spend at least $500,000 in the
state.
The need to offer tax credits should really prompt policymakers to ask
another question. Why do film companies need to be tempted into the state to
begin with?
The idea of giving film companies tax credits took off in the 1990s, when
the high cost of doing business in California led production crews into
Canada. Louisiana policymakers saw an opportunity: In return for tax breaks
or credits, film companies could instead bring jobs and business to their
state.
Since then, 44 states, the District of Columbia and Puerto Rico have put
into place movie production incentives, which try to lure film companies
with tax credits, exemptions, grants or rebates. Twenty-eight states offer
films tax credits that require companies to spend a certain amount in-state
and employ a minimum number of people. In return, companies apply a credit
to their income tax based on the percent of expenditures, wages or
investments generated in-state due to the production.
But states are finding that it is barely worth the lost revenue. A recent
report by the Massachusetts Department of Revenue found that of the $44
million in tax credits awarded in 2011, two-thirds of the $175 million in
spending generated due to economic activity went to out-of-state workers,
and 47 percent of the wages generated, or $53 million, went to those earning
over $1 million.
On net, Massachusetts' film credit program is costing the state more than it
delivers. After subtracting payments to out-of-state residents and the
budget reductions required to fund the credits, only $39 million in state
economic activity resulted. The findings have prompted Governor Deval
Patrick to cap the state's program to $40 million in annual credits.
North Carolina's Legislative Services Office analysis shows their film
credit program realizes even less impressive returns. In 2011, the state
awarded $30.3 million in film credits – reimbursing productions that spent
over $250,000 up to 25 percent for qualifying expenses. Yet, the program
could only claim about 55 to 70 new jobs. Based on their model, the report
claims that if instead North Carolina's business taxes had been reduced
across the board by $30.3 million, between 340 and 450 jobs and $14 million
in personal income would have materialized.
That counterfactual points to the main policy defect with credits. What's so
special about film companies? Why not make the rules business-friendly for
everyone? As the Tax Foundation points out, the few states that don't award
film credits can offer companies something else: lower overall taxes. Nevada
doesn't tax corporate or individual income. Delaware has no sales tax. And
New Hampshire doesn't levy taxes on wages or general sales.
It's not just that the credits don't really perform as advertised; they also
provide an opportunity for abuse behind the scenes. In 2007, Iowa state
officials discovered that the state film office's cheerleading for generous
tax credits marketed as "half-price filmmaking" was cover for a small
scandal. Film credit funds were used to purchase luxury cars for movie
producers, receipts and expenses were rarely submitted, contracts were
amended—post-approval—to increase credits, and payments went to filmmakers
' relatives and to people outside Iowa. The program has since been suspended.
In Michigan, a recent production may have tried to get around the rules and
meet the "putting Michiganders to work" requirement by putting the lead
actor's chauffeur to work painting walls.
Despite all of these warning signs, one has to question why Maryland feels
the need to spend more tax dollars on this industry while simultaneously
debating whether to raise taxes to fund its ever-growing budget. Perhaps
rather than giving the film industry a break, Maryland and other states
should consider tax policies that put everyone on equal footing. |
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