September 8, 2012
REPEAL THE HOLLYWOOD TAX CUTS — STATE EDITION: Do Hollywood tax credits really help the economy? Capitol’s number crunchers wonder if proposed $200 million in subsidies could be used better elsewhere.
As Gov. Jerry Brown mulls whether to sign into law another round of subsidies for Hollywood production companies, the question that confronts him is how much each job on a movie set is worth to taxpayers.
In Massachusetts, lawmakers recently discovered a similar program was much more expensive than they thought. After years of subsidizing film productions without looking too closely at how that was helping the economy, state officials put it under a lens and found that taxpayers were spending as much as $300,000 to bankroll each position.
Other states that went in for a close-up after dispensing hundreds of millions of dollars in tax breaks found that every public dollar put into the film industry was generating a few dimes, or less, in revenue. . . .
“The state is using money it then can’t use for other things, like education, transportation and healthcare, which also create jobs and economic growth,” said Nicholas Johnson, vice president for state fiscal activity at the Center for Budget Policy and Priorities, a liberal think tank in Washington, D.C. “There is no accounting for what else the state could be doing with those dollars to provide economic growth.” . . . The Tax Foundation, a conservative think tank in Washington, noted in a review in April that the majority of studies not bankrolled by industry-affiliated groups or local authorities eager to attract productions have found the credit’s performance lackluster.
Government studies in Arizona, Connecticut, Massachusetts, Michigan, New Mexico and Pennsylvania concluded that every dollar invested in the tax credit was returning less than 30 cents in revenue, the foundation noted.
Their analysis raised the question of whether Hollywood firms that already enjoy numerous tax advantages should get another break and took aim at some of the “opaque” accounting maneuvers used by the studios.
“Forrest Gump,” one of the industry’s highest grossing productions, showed no profit on the books, the analysis noted.
“Perhaps the highest level of creativity in Hollywood,” it said, “is the creative accounting.”
Well, Eva Longoria wanted to pay more taxes. Her whole industry just may get the chance to fulfill her dream.