And the Oscar for government subsidies goes to …
posted at 5:19 pm on February 23, 2013 by Ed Morrissey
… everyone in Hollywood! Glenn Reynolds has written a number of times on the fat tax breaks Hollywood gets, perhaps especially when they make films outside of Hollywood. Today, Glenn reminds us of the $1.5 billion in tax breaks that the film industry enjoys — while it scolds everyone else for not paying their fair share:
With campaign season over, you’re not likely to hear stars bringing up taxes at this weekend’s Academy Awards show. But the tax man ought to come out and take a bow anyway. Of the nine “Best Picture” nominees in 2012, for example, five were filmed on location in states where the production company received financial incentives, including “The Help” (in Mississippi) and “Moneyball” (in California). Virginia gave $3.5 million to this year’s Oscar-nominated “Lincoln.”
Such state incentives are widespread, and often substantial, but they don’t do much to attract jobs. About $1.5 billion in tax credits and exemptions, grants, waived fees and other financial inducements went to the film industry in 2010, according to data analyzed by the Center on Budget and Policy Priorities. Politicians like to offer this largess because they get photo-ops with celebrities, but the economic payoff is minuscule. George Mason University’s Adam Thierer has called this “a growing cronyism fiasco” and noted that the number of states involved skyrocketed to 45 in 2009 from five in 2002.
In its 2012 study “State Film Studies: Not Much Bang For Too Many Bucks,” the Center on Budget and Policy Priorities found that film-related jobs tend to go to out-of-staters who jet in, then leave. “The revenue generated by economic activity induced by film subsidies,” the study notes, “falls far short of the subsidies’ direct costs to the state. To balance its budget, the state must therefore cut spending or raise revenues elsewhere, dampening the subsidies’ positive economic impact.”
Michigan’s Jennifer Granholm ended up with a Hollywood pie in the face after shelling out tens of millions of dollars in “investments” to draw filmmakers to her state. The money went to build a new state-of-the-art studio at an old GM plant. How did that work out?
Despite tens of millions of dollars in state investment, the promised 3,000-plus jobs didn’t appear. As the Detroit Free Press reported last year, the studio employed only 15-20 people. That isn’t boffo. That’s a bust. The studio has defaulted on interest payments on state-issued bonds, and the guarantors—the state’s already stressed pension funds—may wind up holding the bag. “In retrospect, it was a mistake,” conceded Robert Kleine, the former state treasurer who signed off on the plans in 2010.
Be sure to read it all — and keep reading it while stars like Eva Longoria talk about helping out burger-flippers. They’re helping themselves to taxpayer money more than being concerned about helping anyone else.