Colin McNickle At Large

The film tax credit rip-off

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Here they go again: Legislation has been introduced in Harrisburg to increase Pennsylvania’s Film Tax Credit from $70 million to $125 million.

Put bluntly: Proponents have no shame, no brains or both.

In a nutshell (and, oh, how apropos that word is), the incentive is a 25 percent tax credit, based on how much a production spends in the commonwealth.

But, in reality, it is just another in a long line of corporate wealthfare schemes that single out one elitist group at the expense of taxpayers.

And the scholarly research documenting just that only continues to grow despite these vested Hollywood interests (and their vested local acolytes) rah-rah-sis-boom-bah-ing about all the supposedly great and wondrous ancillary benefits to the contrary.

The new push to buck up the film industry with your bucks comes from a legislator who should know better – State Sen. Camera Bartolotta, R-Monongahela.

And the Post-Gazette even touts that her measure has “bipartisan support,” citing State Sen. Jay Costa, a Forest Hills Democrat. Along with Bartolotta, he co-chairs the Senate’s Film Industry Caucus. He’d like to see Pennsylvania move, eventually, to an unlimited cap, like Georgia.

Never mind that Georgia is the poster child for everything that’s wrong with giving the film industry tax credits. And to that end, a bill pending in the Georgia Legislature would end such subsidies.

As WXIA-TV reports it, the cost to taxpayers is implicitly criticized in a House bill introduced in February. “State audits and studies of the film industry say the movie industry is picking the pockets of taxpayers – with the blessing of state officials.”

And as JC Bradbury, an economist at Kennesaw State University who authored one of the cited studies, sees it, “The Georgia film tax credit is not fiscally sensible at all. It absolutely does not pay for itself. It is a huge expense on the economy.”

Again, from the WXIA report:

“In 2018, the state claimed the film industry delivered a $9.5 billion economic impact to Georgia.  That assertion – according to the KSU study – “lacks any economic justification” – which said the actual impact is less than half that.

“The state also claimed the film industry produced 92,000 jobs. The KSU study says the actual impact is about one-third of that. It says each film job costs the state up to $119,000 – which figures at about $220 per Georgia household.”

As Bradbury further notes, “That’s $200 that’s coming out of the pockets of Georgia taxpayers that’s mostly going to California. So it’s a huge wealth transfer. It’s not any type of economic stimulus for the economy at all. There’s no evidence that it is.”

And that’s just the tip of this fiscally threatening iceberg.

Just a year ago, a study by Michigan’s Mackinac Center for Public Policy reiterated that “film incentives don’t generate economic development.” Period.

“That the film industry may benefit from tax or subsidy advantages conferred upon it by state bureaucrats is no surprise,” says researcher Michael LaFaive. “After all, if my neighbor’s wealth is forcibly transferred to me, I’d be better off, too.

“But that doesn’t mean our community’s economic well-being would improve on net balance. Yet people in the film industry promote their subsidies based on a similar logic.”

And the panning of film tax credits goes on and on and with valid reason.

Still, those advocating for higher and higher film tax credits argue that other states are constantly upping the ante to attract movie production companies. It’s the classic government race to the bottom.

And as cautioned Los Angeles Daily News editorial a year ago:

“Supporters argue that other states are luring California’s movie production elsewhere, which is sometimes true. But the best way to combat bad policies is with good ones, not by outdoing what other states are offering.

“California needs to provide a better business climate for everyone if it wants to keep movie production — and all sorts of other businesses — from fleeing to other states,” the editorial concluded.

The same can be said for every state.

It is abhorrent that starry-eyed state lawmakers keep wanting to give a specific – and rather coddled group to begin with – special tax breaks for public benefits that, repeatedly, have been proven to be illusory.

And it is downright despicable that they expect other taxpayers to foot the bill for the “privilege” of being so blatantly ripped off.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).

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Colin McNickle
Colin McNickle

Colin received his B.G.S. from Ohio University. The 40-year journalism veteran joined the Institute in October 2016. That followed a 22-year career with the Pittsburgh Tribune-Review, 18 as director of editorial pages for Trib Total Media. Prior that, Colin had a long and varied career in media — from radio, newspapers and magazines, to United Press International and The Associated Press.

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