NCPA - National Center for Policy Analysis

Should California Subsidize The Film Industry?

January 30, 2014

Filmmakers are traveling outside California to shoot their movies, says The Economist.

A number of states and countries have offered incentives to filmmakers to move production outside of California. As a result, only two live-action films with $100 million-plus budgets were shot in Los Angeles in 2013. Moreover, Los Angeles produced only half the number of feature films in 2013 as were produced in the city in 1996.

How are states luring moviemakers away from California?

  • New Mexico began a program of tax credits and interest-free loans in 2002, and 30 movies were shot there in 2007. The television show Breaking Bad was also filmed in New Mexico thanks to the tax credit opportunities.
  • Other states followed suit. New York, for example, appropriates $420 million annually for film tax credits.

In response, California passed a bill in 2009 that provided $100 million annually in tax credits for movies with budgets under $75 million, as well as some television. But films continue to leave the state. So are these tax credits a good idea?

  • Most research on the subject has found that the tax credit programs simply put more money into the hands of filmmakers.
  • A Louisiana study found that for every dollar that the state received in revenue from film production, it spent $7.29 in tax credits.

Source: "Best State in a Supporting Role," The Economist, January 18, 2014.


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