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.

CA Gives Nearly $68M in Hollywood Tax Credits

From Mercury News:

California on Monday announced the first batch of movie and TV productions to qualify for tax credits under a film incentive program that former "Terminator" actor Gov. Arnold Schwarzenegger pushed through the Legislature and signed into law in February.

So far, 25 productions have qualified for $67.5 million in state tax credits, most of which would have relocated elsewhere if the state money hadn't been in place, said California Film Commission Director Amy Lemisch.

"On most of these productions, they were indeed location-scouting and budgeting in other areas outside of California," she said.

The Walt Disney Co.'s "Beverly Hills Chihuahua 2," was slated for filming in Vancouver had the funding not come through, and "Christmas in Beverly Hills" by Fast Lane Productions LLC might have become "Christmas in Arizona" if it had not qualified for state credits, she said.

One TV series, Comedy Central's "Important Things with Dmitri Martin," will likely hire 100 staffers based in California, she said.

Lemisch said the projects are budgeted to spend $347 million on basic production in California, and are expected to spend 30 percent to 40 percent more on actors, directors, producers and other creative talent and rights.

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.