The ongoing debate over the economic wisdom of state film subsidies stepped up several notches Wednesday with a think-tank report dismissing incentives as wasteful and unfair — and the Motion Picture Assn. of America immediately blasting the report.
The Center on Budget and Policy Priorities asserted that using state tax credits to lure productions has the downside of reducing public services.
“While they appear to be a ‘quick fix’ that provides jobs and business to state residents with only a short lag, in reality they benefit mostly nonresidents, especially well-paid nonresident film and TV professionals,” said report author Robert Tannenwald. “Some residents benefit from these subsidies, but most end up paying for them in the form of fewer services — such as education, health care, and police and fire protection — or higher taxes elsewhere. The benefits to the few are highly visible; the costs to the majority are hidden because they are spread so widely and detached from the subsidies.”
Vans Stevenson, the MPAA’s senior VP of state government affairs, called the report “politically motivated” and “slipshod,” with no understanding of showbiz and the importance of the jobs and economic development produced by the tax credits. “Bottom line, this is a report produced by an organization that has already proclaimed itself antagonistic to tax cuts and incentives, and it found a way to examine the data to back up its own prejudiced point of view,” he added.
With state economies in turmoil, tax incentives are a political football in such locales as Iowa, Michigan, New Jersey, New Mexico and Wisconsin (Variety, Sept. 27-Oct. 3). The report said states would be better served by eliminating, or at least shrinking, film subsidies and using the freed-up revenue for public services and more cost-effective development strategies, such as investment in education, job training and infrastructure. Tannenwald’s report said the subsidies offer “little bang for the buck,” noting that they’re currently offered in 43 states with fiscal year 2010 commitments of about $1.5 billion and a median worth of 25¢ for every dollar of subsidized production expense.
“Subsidies reward companies for production that they might have done anyway,” he added. “Some makers of movie and TV shows have close, long-standing relationships with particular states. Had those states not introduced or expanded film subsidies, most such producers would have continued to work in the state anyway.”
Stevenson responded by asserting that the film and television industry supports more than 2.4 million jobs and generates about $13 billion in taxes and $40 billion in payments to vendors, suppliers and others nationwide. “These jobs provide an immediate opportunity to expand local employment during a difficult economy, and the state has the benefit of current time value of money: employ now — pay later,” he added.
Stevenson said that locations with uninterrupted film tax credit programs have seen continuing investment and job growth.
“In Massachusetts for example, only 10 films were produced over seven years with $67 million of direct investment, and once the credit was enacted, the Commonwealth had 26 films in three years with a startling $676 million of direct investment to the state,” he said. “The film and television incentive programs can do wonders and are a robust economic stimulus.”