NCPA - National Center for Policy Analysis


February 10, 2009

Michigan Gov. Jennifer Granholm announced last week the development of a new $54 million movie production facility to be built in Pontiac as part of an ambitious and costly plan to build a film business amid the ashes of the auto industry.  The state isn't contributing cash to the facility's construction, but it is offering $15 million in film-related tax credits, plus as much as $101 million in state tax credits over 12 years, if hiring goals among other criteria, are met.

Michigan's efforts to lure film production have shown mixed results so far, says the Wall Street Journal:

  • Despite such aggressive incentives as a law signed last year that offers cash refunds of 40 percent or more to productions that spend more than $50,000 in state.
  • Hollywood studios have moved some individual productions to the state, such as the Clint Eastwood hit "Gran Torino," which Time Warner Inc.'s Warner Bros. shifted to the Detroit area from Minnesota to take advantage of the rebates, but few have established a permanent presence.

That states should be engaging in corporate welfare in these tough economic times by handing out film tax credits is dismaying, says John Nothdurft, Legislative Specialist with the Heartland Institute.  Moreover, having Michigan taxpayers pick up a $122 million tab to bring Hollywood to Detroit isn't economic development, it's irresponsible.

Rather than subsidizing the movie industry and begging for federal stimulus dollars, Michigan and other states need to get back to attracting jobs and boosting their economies the old-fashioned way: by reducing spending and implementing a low, broad-based tax system, says Nothdurft.

Source: John Nothdurft, "Movies Can't Fix Bad Government," Wall Street Journal, February 8, 2009; and Peter Sanders, "Michigan Sees Itself in the Movies; State Plans Studio in Shuttered GM Plant as It Tries to Build New Industry," Wall Street Journal, February 3, 2009.

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