Film Credits Losing Their Appeal

Hollywood handouts may soon be a thing of the past. For decades some states have been offering “film credits” to entice directors to shoot movies within their borders. The theory behind this is that film production will boost the local economy and create jobs for local residents. And Hollywood certainly enjoys the preferential tax treatment.

Unfortunately, according to The Tax Foundation, these credits do not pay off for the state. The credits are often overly generous -- Michigan offered a 42% production credit -- and stimulate far less economic activity than proponents claim. Any jobs that are created are temporary in nature and do not lead to any long-term betterment for residents.

According to the Tax Policy Blog, Michigan, Iowa, Arizona, and New Jersey are all suspending their film tax credits. Considering the dire state of many states’ economies and budgets, I would not be surprised to see more states following suit.

Read more about film tax credits here and see Hollywood’s response here.

2 Years After Tax Law, Michigan's Making Movies

In the two years since the State of Michigan offered the movie industry some of the largest tax incentives in history, over 80 film and television productions have taken place. The Associated Press examined how the state is adjusting to this new popular industry and its economic benefits.

Since the measure became law on April 7, 2008, 89 movie or TV productions have been completed. Hotels, caterers and others getting some spin-off business can't wait for the industry to expand.

But some lawmakers are questioning whether Michigan is getting its money's worth.

The tax credit program is projected to cost the state nearly $69 million for projects completed in 2009, not counting incentives given for permanent infrastructure projects, according to the Michigan Film Office. The potential annual bill is higher — more than $100 million — but some projects weren't finished and won't get the tax credits.

Continue reading at Google News…

States Give Hollywood A Fortune In Tax Breaks

Earlier today, I came across this interesting Associate Press article discusses how some States – who are hiking taxes elsewhere – are offering huge tax incentives to the entertainment industry, primarily for movie and television. This has gotten taxpayers concerned, as they are wondering if they are going to benefit from the Hollywood tax incentives.

An Associated Press survey found that states competing for projects handed out $1.8 billion in tax breaks and other advantages to the entertainment industry from 2006 through 2008.

Several states have even sweetened their incentives recently or are considering doing so, for fear that if they don't land the next major motion picture, someone else will.

"The industry has been able to play off North Carolina against South Carolina against Louisiana against Georgia. Louisiana raises its incentives, and it puts pressure on South Carolina, North Carolina and other states to do likewise," said Bob Orr, a former North Carolina Supreme Court justice who heads an anti-incentives group called the North Carolina Institute for Constitutional Law.

Some states argue that the tax breaks pay for themselves in revenue. Many others contend that even if tax revenue takes a hit, the film industry boosts their economies with an infusion of cash and jobs.

Production companies spend money on sets, props, caterers, and salaries for actors, extras and crew members. Movie crews eat at restaurants and stay in hotels while in town.

Movie shoots can also give a place a little Hollywood glamour, which can, in turn, boost tourism — something that has happened in Durham, N.C., where the 1988 Kevin Costner comedy "Bull Durham" was shot, and in Savannah, Ga., the setting of the 1997 film "Midnight in the Garden of Good and Evil."

"I relate this to creating jobs similar to the way you would turn on a light," said Republican state Rep. Stephen L. Precourt of Florida, who is pressing to increase the state's incentives. "Within days, people could be working here under this incentive program."

Continued on Google News.