Film, TV tax breaks a huge ‘waste of money,’ some believe

“They’re a colossal waste of money.” — North Carolina Rep. Paul Stam, on incentives to attract TV and film productions
By Doug G. Ware
HOLLYWOOD, March 31 (UPI) — Decades ago, nearly 100 percent of all U.S. film and television productions were produced and filmed entirely in the Los Angeles metropolitan area. Today, that share is far lower due to immense incentives offered to filmmakers to do their shooting away from Hollywood — and in some cases, away from the United States.Most states offer tax breaks and subsidy incentives to productions that work within their borders. The idea is to boost local economies and, to a lesser extent, take a slice of the world’s most scrumptious pie. But lately, some experts say, that slice of pie isn’t filling enough to justify its menu price.

“They’re a colossal waste of money,” said North Carolina congressional Speaker Pro Tempore Paul Stam. “We were sending big checks to Hollywood producers and rich guys out of state.”

Billions of dollars in film and TV incentives have been offered outside the Golden State for many years, but lawmakers are now taking bigger steps to ensure productions that are set in California (or anywhere else) don’t get made anywhere else.

California legislators recently tripled its tax incentives program to offer $330 million annually to productions in an attempt to bring back some of Hollywood’s old glory. And that, paired with growing dissatisfaction with the industry in other states, may just work.

Because the film and television industry generates billions of dollars every year, one could never mistake film studios as having poverty-level incomes. But like their audiences, studios are always looking for the best possible deal — to save the most money. That’s, in fact, the very reason other states have any incentives at all to attract big budget films and TV programming.

That goes for all productions, too. A forthcoming disaster film set in California about an earthquake on the infamous San Andreas Fault isn’t even being shot there. Instead, producers took the film on the road 7,000 miles to Australia — and snatched up much of the country’s $20 million in incentives.

States spend about $1.5 billion every year trying to get entertainment business. Some subsidize as much as 30 percent of a project through tax breaks and other incentives. But recent analyses suggest that those states aren’t receiving much of a return on their investment.

Major Productions That Have ‘Run Away’ From Hollywood
FilmsSan Andreas (2015, Australia), Ted (2012, Massachusetts), The Dark Knight Rises (2012, Michigan, Pittsburgh), The Dark Knight (2008, Chicago)
TVThe Walking Dead (Georgia), Breaking Bad (New Mexico), Orange Is the New Black(New York), House of Cards (Maryland)

“In Maryland, where the Netflix series House of Cards is shot, a recent report by the legislature’s nonpartisan staff found that for every dollar in film incentives the state doles out, it gets back only 10 cents in state and local tax revenue,” the Boston Globe reportedTuesday.

North Carolina has decided to reduce incentives after a report there showed that roughly $30 million was spent in 2011 but produced fewer than 70 new jobs.

“Our economists tell us it’s the worst return on investment of any of the tax-credit programs,” Rep. Stam said.

In Louisiana, taxpayers lost more than $180 million last year that was dished out to TV and film productions. Massachusetts is considering phasing out its incentives altogether. And Nevada seems to be trading glamorization for innovation — as most of the money from its film incentives program is now going to a different program to attract electric car maker Tesla.

Even California doesn’t get too good a return on its film incentives program — 65 cents for every dollar spent, the Los Angeles Times noted last August.

Supporters, though, say the value of film production work goes far beyond figures on the initial balance sheet. Exposure in film, they say, triggers a tremendous boost in tourism — and creates jobs that otherwise would not be there.

“If these programs were not working … They would be eliminated,” said Vans Stevenson, an executive at the Motion Picture Association of America.

Nonetheless, one thing that cannot be argued is the fact that Hollywood doesn’t keep nearly as many productions as it used to.

“Producers tell us, ‘I’d love to shoot here but I have to go where the incentives are,'” San Francisco film executive Susannah Robbins said.

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