Green Room

And the Oscar for government subsidies goes to …

posted at 5:19 pm on February 23, 2013 by

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.

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So, like sports team subsidies, then?

Count to 10 on February 23, 2013 at 5:35 PM

Sigh. Even Instapundit’s bashing Sarah Palin now?

sauldalinsky on February 23, 2013 at 7:10 PM

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.

…she left us with companies like GOOGLE and several other Obama supporters in the green energy field…who received millions in taxpayer dollars not just tax incentives…who did not create a fraction of the jobs promised…or the products specified…some never got off of the ground…BUT, the money is gone!

KOOLAID2 on February 23, 2013 at 8:14 PM

Politicians like to offer this largess because they get photo-ops with celebrities, but the economic payoff is minuscule.

What a crock. Placement in a Hollywood movie is better than any TV advertising or glossy brochure for tourism and attracting business relocation.

John the Libertarian on February 24, 2013 at 12:02 AM

My God tax breaks are not fracking subsidies!
This careless redefining of words is why people do not understand the US Constitution anymore.

Badger40 on February 24, 2013 at 9:28 AM

All these celebs get rich and still stay in California. I do not think the Avengers movie really paid of for the post-Apocalyptic hellhole of Cleveland.

antisense on February 24, 2013 at 11:23 AM

Moreover, these movies are not real useful products. Much like money raised through sports, it is a huge waste of capital.

antisense on February 24, 2013 at 11:24 AM

Moreover, these movies are not real useful products. Much like money raised through sports, it is a huge waste of capital.

antisense on February 24, 2013 at 11:24 AM

Careful there. It’s private capital. People should be free to make what you might consider useless.
ThaT sort of statement taken literally by pols, could be used to justify the confiscation & spreading of wealth.
I happen to really like some movies. And I don’t find my entertainment dollars useless.

Badger40 on February 24, 2013 at 12:50 PM

Moreover, these movies are not real useful products. Much like money raised through sports, it is a huge waste of capital.

antisense on February 24, 2013 at 11:24 AM

Sporting events have a huge $$$ impact on the local hospitality businesses (try to get a hotel room or restaurant seat in Columbus OH on a football Saturday). Most of this involves low-paid people so it is a form of “income redistribution” (voluntary in this case plus the beneficiaries actually have to do more than go to the mailbox). Typical movie set usually has how many people?

Therein lies your difference.

teejk on February 24, 2013 at 1:11 PM

Typical movie set usually has how many people?

teejk on February 24, 2013 at 1:11 PM

And many movies involve hiring local people for various things. To say nothing of the movie people engaging in local commerce while they’re there shooting.
Whatever the impact, it’s better than zip I would imagine.

Badger40 on February 24, 2013 at 5:10 PM