NCPA - National Center for Policy Analysis

Do Film Tax Credits Live Up to Their Promises?

June 17, 2011

Film tax credits fail to live up to their promises to encourage economic growth overall and to raise tax revenue.  States claim these incentives create jobs, but the jobs created are mostly temporary positions, often transplanted from other states.  Furthermore, the competition among states transfers a large portion of potential gains to the movie industry, not to local businesses or state coffers, says the Tax Foundation.

  • In 2010, a record 40 states offered $1.4 billion in film and television tax incentives.
  • All told, states have provided nearly $6 billion for such programs over the past decade.
  • The peak year will likely stand as 2010, since many governors and legislators are ending their programs, preferring to use the money for other priorities or leave it with taxpayers.
  • In short, while film incentive programs were once universally applauded as great economic development tools and tourism boosters, their merits are now being rigorously debated.

At a minimum, film incentive programs should be required to report how many dollars in incentives were provided per each full-time equivalent job created by qualified productions.  Programs should be reviewed periodically for their effectiveness by legislative oversight or a third party.

Source: Joseph Henchman, "More States Abandon Film Tax Incentives as Programs' Ineffectiveness Becomes More Apparent," The Tax Foundation, June 2, 2011.

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