Brian Dzyak

http://harveyoberfeld.ca/blog/film-industry-community-contributors-or-corporate-welfare-bums/

B.C. wants truce with Ontario, Quebec on film tax credits

http://www.theglobeandmail.com/news/british-columbia/bc-wants-truce-with-ontario-quebec-on-film-tax-credits/article12626487/

 

 

 

 

IAN BAILEY

VANCOUVER — The Globe and Mail

 

 

 

B.C.’s Finance Minister is challenging his counterparts in Ontario and Quebec to stop allowing Hollywood studios to pit the three provinces against each other for “unaffordable” film tax credits.

 

“As a country, and individual provinces within the country, we are better off to stop competing to see who can send the biggest cheque to Hollywood,” Mike de Jong said Monday.

 

 

Mr. de Jong says the status quo only benefits Hollywood so he’s hoping the other provinces will join B.C. in jointly managing such tax credits.

B.C.’s Liberal government, under pressure from some in the province’s film and TV production sector as well as the B.C. NDP opposition to boost subsidies in recent months, attacked such measures as a race to the bottom. Premier Christy Clark said B.C. taxpayers were being generous enough with about $300-million in annual credits.

The Liberals went into the campaign ahead of the May provincial election with a platform commitment to “work with the provinces of Ontario and Quebec to establish a rational film incentive policy across Canada to prevent unaffordable industry support systems.”

Once the Liberals won re-election, Ms. Clark enshrined the idea in her mandate letter to Mr. de Jong, putting it on his to-do list as finance minister to “work with the ministers of finance of Ontario and Quebec to secure an agreement on a competitive film industry tax credit regime.”

Mr. de Jong, who says his department is pulling together data on the issue, says he’s not yet sure how it would work, but he’s calling for some form of “strategic oversight,” and an agreement that provinces won’t undercut each other to attract film business.

“The objective is to avoid a repetition of what has happened repeatedly where the largely foreign production sector of large studios are able to extract a richer subsidy regime in one jurisdiction to then put pressure on other jurisdictions,” he said.

B.C.’s tax credit for foreign productions is 33 per cent on labour. But Ontario and Quebec offer 25 per cent on all production costs.

“We are being played one against the other in a classic negotiating strategy that pits one part of the country against the other,” said Mr de Jong.

“For a taxpayer in Ontario hearing about the challenges their government is having wrestling against a multibillion-dollar deficit, the idea of sending $30,000 to Warner Brothers every time they blow up a Mercedes may strike them as odd.”

Ontario’s Culture Minister Michael Chan told The Globe and Mail last week that his government is satisfied with the status quo, noting Ontario has to compete with other jurisdictions around the world.

Mr. de Jong said he raised the idea before the election with his counterparts in Toronto and Quebec.

Asked about the response, Mr. de Jong vaguely said there has been “interest” as well as a desire to not compromise existing success in attracting production work to their jurisdictions. However, he said the ministers also understand the trend of having jurisdictions compete against each other has not been useful.

He said he will keep raising the issue with his fellow ministers.

Peter Leitch, president of North Shore Studios in North Vancouver and a leading B.C. industry spokesman, said the government position makes sense, calling it “counterproductive” for governments to compete on the tax front.

In any event, the chair of the Motion Picture Production Industry Association of B.C. said, taxes are only one factor in competition. Others include locations, crews and studio facilities.

 

 

Film tax credit is a raw deal for taxpayers

By Antony Davies & James R. Harrigan

Pennsylvania Senate Majority Leader Dominic Pileggi has announced that he will introduce legislation to uncap Pennsylvania's Film Production Tax Credit (FPTC) in an effort to entice production companies to film in the commonwealth.

To justify this sweetheart tax break for the film industry, Sen. Pileggi cites a “detailed report from the Independent Fiscal Office” that “concludes that ‘uncapping' the film tax credit would have a significant positive impact on Pennsylvania's economy with a minimal cost in the coming fiscal year.”

This is partially true. The Independent Fiscal Office (IFO) did release a report. The rest of the senator's statement, like most of what the film industry produces, is pure fantasy.

On page 2, the IFO clearly states that “(the report) does not address the fiscal or economic impact of the FPTC in general, nor does it evaluate the overall effectiveness of the credit.” In fact, the report can be summarized in two points: The tax credit will cost us money and the tax credit will be good for the film industry. The report goes on to say that “for every one dollar in tax credit awarded, the Commonwealth recoups $0.14 in tax revenue from the associated economic activity.”

Put another way, the tax credit sells our tax dollars to the film industry for 14 cents each.

Pileggi's bill would uncap this giveaway, allowing the film industry to buy as many of our tax dollars as it likes at this bargain price.

Granted, these are tax credits — meaning that we aren't exactly giving away our tax dollars so much as failing to collect them. But the IFO admits in its report that it doesn't know how many films would have been made in Pennsylvania if the tax credit didn't exist.

If the answer is “all of them,” we really are giving away our tax dollars. Even if the answer is “only half of them,” we're selling our tax dollars for 28 cents each, not 14 cents each. That's still a raw deal for taxpayers.

Don't get us wrong — cutting taxes spurs economic growth. But to avoid favoritism, tax cuts need to be across the board.

When government picks winners, as Pileggi is doing, it invariably fails because politicians don't put their own money on the line. They put our money on the line. If the bet pays off, they win. It it doesn't, we lose.

If Pennsylvania has $130 million to throw around, then let's cut taxes across the board. Then taxpayers could decide for themselves which industries deserve their hard-earned money.

The job creation would be the same; the economic growth would be the same. What would be different is that the new jobs would be producing things that the people want, not things that the politicians think we should have.

The film tax credit is a slap in the face to the hardworking people of Pennsylvania, delivered by Pileggi as he woos one industry at the expense of the others. If lower taxes mean economic growth, then let's lower taxes for everyone.

And if Sen. Pileggi wants to invest in the film industry, let him do it with his own money.

Antony Davies is associate professor of economics at Duquesne University. James R. Harrigan is a fellow of the Institute of Political Economy at Utah State University.

 

Where is the study showing that the tax credit system has had a negative net effect on the economy of Ontario?

 

There is no call here to get rid of the tax credit system for film. 250, 000 people are directly employed in the film and TV industry in Ontario. All of those people buy stuff and consume, the very people you insist we need to run the economy.

 

Ontario gives way more money to the auto industry. And Quebec and the federal government have given billions to Bombardier. If it's ok for other industries to receive subsidies in this province, then it's perfectly fine for the film industry as well.

 

R,

So, you're in favor of mandating that "Joe Six Pack" be solely responsible for the tax burden which pays for schools, roads, bridges, national defense, etc, while Corporations and their CEOs walk away scot-free? Because that's precisely what the Tax Bribe system is doing. And the reason why the wealth gap has grown exponentially in the last thirty years since "Reaganomics" has taken hold over most of the world. What you're saying, Richard Boddington, is that Corporations or their Management, should not be responsible in any financial respect for the nations that care and feed them to allow them to operate and succeed. You just want Corporations to operate with impunity, no financial or other responsibility to the PEOPLE who cough up the financial sacrifice that makes their "for profit" enterprise possible. In other words, what you're saying is "I owe them NOTHING!"

 

I have pointed out to Brian many times that the agricultural subsidies in the USA are off the charts!!

 

There are a 100 plus industries in the US getting "corporate welfare". Big oil famously makes big profits, and still gets big subsidies.

 

Why pick on the film tax credits alone?

 

R,

Because this site is called "cinematography.com" not farming.com.

The entire idea of Corporate Welfare is basically wrong and anti-thetical to the so-called "Free Market" advocates who whine like babies about any other government intervention into the markets. Typical hypocrites, those sort, though, so nothing new there.

The purpose of "government" is to establish and maintain a stable society/civilization and a stable viable economy. It accomplishes that goal by regulating basic human behaviors too ensure that the most selfish and greedy and reckless are not permitted to misbehave in ways that threaten that stability. (Traffic laws are one of the most basic and relatively uncontested examples of this. Economic regulations on banking and trade are necessary but very contested examples of this.)

Part of that mandate includes taking appropriate steps toward the long-term progress and security of civilization and the environment. To THAT end, government SHOULD be investing in new technologies, such as alternative non-fossil fuel energy production and distribution, because we know that human activity in terms of carbon emissions is threatening the ability of life itself to survive on this planet. So subsidies and other financial "incentives" are more than appropriate in these cases, just as government should be financing basic rights like education and healthcare.

The film industry doesn't fall into the category of "necessary to human survival" so should be exempt from receiving tax-payer funded welfare from people who see zero direct financial benefit from such welfare...and more to the point, these tax payers are typically LOSING out on much needed tax revenue which is necessary for the things that society does require, such as infrastructure and education funding which can only be paid for with taxes from business and labor. ALL reputable studies/audits on film tax "incentive" programs show a direct LOSS as governments hand out more money than the locality takes in with wages to workers. Their fallback excuse is "well, we generate lots of ancillary economic activity which makes up for it," but as of yet, again, no reputable studies have proven this at all. So the Corporation taking the tax breaks and/or subsidies walks away with cheaper manufacturing costs while sticking their employees with the tax bill and the locality that handed out those tax breaks and subsidies are left with a net loss on their tax revenue vs what they handed out. This has a ripple effect on economies as workers are the major drivers in consumer good consumption (buying things) while Corporations and their CEOs consumer far far less. And less consumer spending means less demand which means less employment across the board which only adds to the loss of tax revenue necessary for government to fulfill its mandates.

Movie subsidies lure Hollywood stars, but is it worth it?

http://realfilmcareer.com/movie-subsidies-lure-hollywood-stars-but-is-it-worth-it/

 

 

http://www.abc.net.au/unleashed/4722746.html

BRENDAN SWIFT

The Australian Government is spending millions on subsidies to encourage international film production companies to shoot their movies in Australia. Is it worth it? Brendan Swift argues for more transparency.

Marilyn Monroe once described Hollywood as a place where they’ll pay you a thousand dollars for a kiss and 50 cents for your soul.

The Australian Government is paying somewhat more than a thousand dollars: what started as a $12 million offer for Disney to shoot its blockbuster remake of 20,000 Leagues Under the Sea in Australia quickly escalated to $21.6 million. That better be some kiss.

While the 20,000 Leagues shoot has now been delayed until next year, the federal government has also set aside a further $20 million to attract more foreign productions although there is no clear mechanism to trigger it.

Does this represent value for taxpayers, let alone the struggling Australian film production industry?

The concept is one applied to a number of sectors: provide a sweetener for companies to set up in Australia before reaping the benefits through job creation and new expenditure in the economy.

Local films, which rely on a strong cultural argument for subsidy, receive a hefty 40 per cent government rebate on qualifying expenditure called the Producer Offset. Foreign films, where the argument is entirely economic, receive a 16.5 per cent Location Offset, which the industry would like to see raised to 30 per cent to help offset Australia’s strong local currency.

Transparency is not a strong point of the film industry. Rather than raise the Location Offset, the government has chimed in with a series of one-off payments.

The Wolverine received $12.8 million to shoot in Sydney last year although sci-fi film Jupiter Ascending was knocked back (and is now being made in London). But while the government acknowledged that The Wolverine’s one-off payment raised its total subsidy to the equivalent of 30 per cent of local expenditure, it made no such statement when announcing the 20,000 Leagues grant.

Trying to assess the value of such payments, and their economic impact, is impossible for the public in such cases.

The government did say that the 20,000 Leagues grant “could” create up to 2000 jobs and thatThe Wolverine did create over 1750 jobs – but then a single day’s work by an extra counts as a job. There is never any mention of full-time-equivalent positions, let alone how long those jobs last (they are almost all temporary).

The recent decision by Ford Australia to jettison 1200 workers’ jobs when it closes its Broadmeadows and Geelong manufacturing plants again spurred a debate about the benefits of economic subsidies: last year, the Federal Government gave $34 million to Ford to maintain its local production until at least the end of 2016.

But the short-term job commitment of Disney for $21.6 million (which does not include the 16.5 per cent Location Offset and state subsidies) is largely overlooked. The situation was double-edged for the battling local industry; desperate for work, they agreed to cut their award overtime rates at the behest of Disney (although it should be pointed out that crew would almost certainly still earn more working on 20,000 Leagues than on a typical Australian film).

Such is the nature of entering the battle to win footloose Hollywood productions, where the location is decided on a film-by-film basis, with subsidy often the determining factor.

Another common economic refrain is to quote the total expenditure that the grant triggers. For example, The Wolverine generated more than $80 million of investment in Australia according to the government.

It’s a big number but assessing the downstream impact relies on economic multipliers, which effectively measure the increase in incomes that flow on from the initial boost in film expenditure. They help governments decide where to commit limited resources among competing sectors, such as the much-maligned car manufacturing sector or film sector for example.

And yet Australia applies one of the most aggressive film production multipliers (2.67), well above the average of 2.34 and countries such as New Zealand (2.55), South Africa (2.50) and the United Kingdom (2.0), according to a recent study by UK consultancy Olsberg-SPI.

None of this is to say that subsidising offshore film production is not a worthy goal – many local cast and crew benefit from such work and large-scale productions support many disparate skills in the arts sector.

But one-off multi-million dollar payments cloud an already opaque film industry.

A soul may be worth only 50 cents in Hollywood, but taxpayers and the industry have a right to evaluate the cost.

Brendan Swift is the publisher of online screen content publication, Picha. View his full profilehere.

 

 

http://globalnews.ca/news/562658/ndps-corporate-welfare-for-film-industry-wont-save-jobs-economist/

 

NDP’s ‘corporate welfare’ for film industry won’t save jobs: economist

By Staff, The Canadian Press

 

 

VANCOUVER – Promises to bring the film and TV industry back to British Columbia figured prominently in the opening and closing credits of New Democrat Leader Adrian Dix’s election campaign.

But economists call it “corporate welfare,” and say B.C. should get out of what has become a “race to the bottom” with tax incentives.

“We know that we have the best crews in North America,” he said in one of his final rallies, where he was surrounded by close to a thousand supporters at Vancouver Film Studios.

“All they require is a level playing field and we will compete, and we will win, and we will bring jobs to British Columbia.”

The Liberal government under Christy Clark didn’t match the glittering tax incentives offered by provinces such as Ontario and Quebec in the past two years — dangling carrots that film industry workers claim have lured business away from B.C.

Dix has pledged to increase film labour tax credits by up to seven per cent for foreign and domestic productions, a move he said would put the province’s incentives at 40 per cent and allow competition with other jurisdictions.

An expert economist from Simon Fraser University, however, says Dix’s election promise seems to be motivated by politics rather than a desire to create lasting jobs.

“It really is a game,” said SFU economist Rhys Kesselmen in a telephone interview. “And it’s most definitely a race to the bottom.”

He added the NDP’s economic policy has so far been inconsistent.

While the party claims to have the industry’s interests at heart, Dix has come out in favour of the provincial sales tax and raising the corporate income tax rate — both policies Kesselmen said are a significant burden for the film and TV business.

The economist also cautioned that singling out one particular industry for “corporate welfare” won’t do much for B.C.’s economy in the long run.

“Why should we be spending that much of public funds for one industry, and in effect we’ve got to tax all the other industries and all households to support (it),” Kesselmen asked.

The rebates, he said, will cost taxpayers between $100,000 and $120,000 per film job.

“We do have evidence from studies in the U.S. and my own back-of-envelope figures support it … that these are very expensive subsidies, or tax credits,” he said.

Kesselmen is skeptical of NDP numbers that indicate Dix’s incentive would cost taxpayers about $45 million annually but generate $93 million.

The Liberal government under Gordon Campbell raised film labour tax credits to put the province on a competitive level, yet it’s becoming increasingly difficult to play the one-up-manship game, Kesselmen said.

He added the industry has done a good job of playing one jurisdiction off the other for tax breaks.

“They are masters of playing off Ontario versus B.C., California versus Texas versus New York,” Kesselmen said, with governments essentially being taken hostage until they meet industry demands.

“It’s kind of like the industry that cries wolf,” he said. “And apparently they’ve sold it to one political party in B.C.”

Kesselmen said he wasn’t an advocate of eliminating the full 33 per cent tax credit but couldn’t see any economic benefit to increasing it.

It’s a fallacy to assume film industry workers are going to start a mass exodus from B.C. if business isn’t booming as it once was, Kesselmen added.

 

The stakes are high for Save BC Film spokesman Wayne Bennett, 44, who has worked in the business for 23 years as a production manager on films and TV shows such as The X-Files, Alcatraz and Case 39.

He said it’s not as easy to re-train or find work to suit their specialized skill set as economists make it out to be.

“I tried to get out of the industry last year,” Bennett said, adding recruiters advised him that he’d have to go back to school and re-train — something he couldn’t afford to do mid-life, with a wife and kids relying on him as breadwinner.

He said the province is already starting to lose cast and crew because of jobs going elsewhere.

“If you’re not in the game on a financial level, all the other things that we have to offer — in time zones, in location, in infrastructure, in people … really take secondary placement,” Bennett said.

“They’re going to go where they can get the best deal.”

He said this election is a chance to show the province how important the industry is to the well-being of B.C.’s economy.

“We just wanted our government to realize the … value of what it actually brings to the province, in terms of 15,000 direct people who work on film and television sets every day,” Bennett said.

Between 1,400 and 1,600 other retail, hotel, car rental and other businesses also benefit from spin off of what Bennett calls “new money,” he added.

Bennett said the industry has already invested more than a billion dollars to establish physical infrastructure — sound stages, rental houses and equipment.

“Once we start losing that it’s incredibly difficult to get back,” Bennett said.

B.C. lost 3,500 direct and spin off film and television production jobs between 2011 and 2012, reported the Canadian Media Production Association in February. At the same time, Ontario gained 7,900.

Vancouver-based actor Jerry Wasserman has had a job in the industry since he came to the province from New York more than 40 years ago.

He’s one of the lucky ones with a long “Vancouver resume” spanning decades, that includes films with Johnny Depp, Kirstie Alley and Will Smith and a teaching career in theatre at the University of B.C.

“The opportunities have been so rich,” Wasserman said.

He argued that investing in film and television is similar to investing in events such as the Olympics or the Times of India Film Awards — while they cost significant amounts of money, they also arguably promote the “B.C. brand” and bring in profits in the long run.

“You hope it’s going to generate some kind of return in terms of tourism, in terms of investment,“ he said.

Wasserman has seen the positive impacts that come with a thriving film industry.

“It’s clean, it’s glamorous, it’s brought a real cache to Vancouver,” he said. “I’ve been a Vancouverite since 1972 and so I’ve seen what a difference it’s made in the reputation of the city.”

Currently, Ontario and Quebec offer 25 per cent tax credits on every dollar spent on TV and film production, in contrast to B.C.’s 33 per cent incentives that apply only to labour.

 

 

 

 

You keep posting these, but what is the point now? You've posted 20 or more and they are all the same.

 

Plus they are all severely flawed.

 

R,

Merely saying they are "flawed" does not mean they are flawed.

Lights, camera … and a $69 million N.C. rebate to movie industry

http://www.journalnow.com/news/state_region/article_a4060fce-b321-11e2-bf30-0019bb30f31a.html

 

J. Andrew Curliss/News & Observer

State leaders blamed each other in October 2011 after Continental Tire chose South Carolina for a large new factory that will employ 1,600 workers.

The biggest hang-up, according to documents and state officials, was $45 million in taxpayer money the tire company said it needed to locate in southeastern North Carolina. Lawmakers could not agree on that large payment in a lump sum, with some wanting to spread the money out into the next decade on top of other state and local incentives. The factory is now being built near Sumter, S.C.

 

That same month, Hollywood producers made a decision that cost North Carolina taxpayers millions and supported far fewer jobs – jobs that have already come and gone. They announced the filming of “Iron Man 3” around Wilmington.

That production, which opens nationally Friday and is expected to be a box-office smash, employed about 800 North Carolinians for seven months last year, the Motion Picture Association of America says.

North Carolina taxpayers subsidized the production with $20 million, according to state and film industry officials.

That money was the result of language in state law, embedded in the tax code, to reward companies that produce films, commercials and TV shows in the state. It is part of a tax structure quilted with special treatment for certain businesses, industries or groups, resulting in annual loopholes that have grown by $1 billion in the past four years.

Film production companies say they are owed more than $69 million from working in North Carolina in 2012, much of which will be paid in cash refunds, according to documents and interviews. That’s significantly more than what Continental Tire wanted upfront to build a $500 million factory, although other incentives to the tiremaker would have pushed the tab to nearly $100 million.

Taxpayer spending to subsidize films is on the rise following bipartisan legislation in 2010 that made the state’s incentive program more generous to filmmakers, records show. It was part of an effort to keep North Carolina competitive with other states, including Georgia, which offers an incentive seen as among the most favorable in the nation for attracting film projects.

The incentives sought in North Carolina have increased from less than $8 million four years ago to $69.2 million last year, according to the revenue department.

An examination by The (Raleigh) News & Observer of the film incentives program shows:

• Film subsidies are not tied to job creation. Instead, the program gives filmmakers a quarter back for every $1 they spend in the state, including wages to actors and crew members.

As a result, jobs numbers do not correlate with taxpayer aid to movies made in North Carolina. One film, “Hick,” in 2011 claimed $1.5 million from taxpayers and listed 600 people employed, including actors and extras. The makers of a different film, “Arthur Newman” starring Colin Firth, claimed $1.7 million, but the production employed one-third of the people: 200, including extras.

• There’s no limit on the amount of money that can be paid out each year. No single movie project can receive more than $20 million, but there is no other cap.

To compare, the state’s main job-creation grant program – the one that often gets credit when the governor announces that a company has been lured to the state – has been capped at $15 million in new grants each year, subject to General Assembly approval.

• The most powerful part of the film incentive program lies in a single word: “refundable.” The film incentive is officially known as a “refundable” tax credit, which allows production companies to receive checks from the state treasury, even if they owe little or no taxes.

That’s because film production companies are formed around a single project, such as a movie or commercial, and are structured to generate little actual tax liability, according to industry officials.

In the past 21 months, North Carolina has issued refunds totaling $61 million as the revenue department audits ongoing claims. The state will not release copies of the checks, saying they are taxpayer information protected by law.

The only other refundable tax measure in the state, the Earned Income Tax Credit, was written to assist the working poor. Lawmakers and Gov. Pat McCrory allowed it to expire this year.

• The film incentives are granted no matter how much money a film makes. The popular “Hunger Games” movie, for example, was filmed in North Carolina and grossed nearly $700 million worldwide, according to tracking service Box Office Mojo.

The production company has asked North Carolina taxpayers for $13.7 million, new records show.

Plenty of competition

The film industry says the incentive money lures lots of spending when movies and TV shows are made here, cash that cycles through the economy. In the past five years, movie companies have reported spending about $600 million on wages and goods that qualified for the film credit in North Carolina, according to the state Department of Revenue.

“Iron Man 3” spent about $110 million in the state, including $19 million in wages for North Carolinians, an average of $23,000 per job. The production spent about $41 million on goods and services with more than 700 vendors, according to the Motion Picture Association of America.

The film incentives are crucial, the industry says, in providing a steady stream of work for crew members and other workers on dozens of projects.

Various studies, funded by the film industry, state governments and think tanks, reach widely different conclusions about the special tax treatment. Some states have cut back their programs in recent years. Others are beefing them up.

But there is particular support for the incentives from lawmakers near Wilmington, which has the state’s major movie studio, a collection of stage buildings northeast of downtown owned by EUE/Screen Gems Studios.

In a recent letter to leaders in the state Senate, Screen Gems Executive Vice President Bill Vassar wrote that the tax incentive for films has become so important that it keeps the entire film industry in business across North Carolina.

“(T)he absence or degradation of this credit will result in the severe reduction, if not decimation, of this important industry in our state,” wrote Vassar, who also heads the Wilmington Regional Film Commission.

In an interview and follow-up email exchange, Vassar said film projects inject new, out-of-state money into local economies.

“I have seen elected officials in Raleigh who were nonbelievers come over from the dark side once they did their homework,” he said.

But critics say the film incentives would be the star on a poster showing why North Carolina’s tax code unfairly helps decide which businesses – moviemakers and others – win and lose.

Brent Lane, director of the UNC Center for Competitive Economies, said film subsidies attract productions to the state but “are a bad idea if you’re measuring results on conventional economic development outcomes – you know, sustainable employment, high-wage employment and tax base return.”

“Film subsidies are like rented tuxedos,” Lane said. “You feel like James Bond for a weekend. But on Monday, you better have a real job. … Most times, we give an incentive to a company, and if they leave five years later, everybody is (upset) about that. You give an incentive to a film company, you know they are going to be gone in three months.”

Carl Davis, a senior policy analyst with the Institute on Taxation and Economic Policy, a nonprofit group that advocates for people with lower incomes, said film tax breaks are “of very dubious merit.”

“Frankly, it’s just not worth the cost of what they are demanding to bring them here,” he said. “They are not offering enough in return.”

In the past year, taxpayers were asked to subsidize a Dale Earnhardt Jr. commercial for Diet Mountain Dew with $331,000. The production company for “The Daily Show with Jon Stewart,” which filmed at the Democratic National Convention in Charlotte, asked for $190,000.

Film industry supporters are showing concern amid discussions of tax legislation in Raleigh.

Their worry swelled into a rally last month in downtown Wilmington, where area Republican and Democratic legislators and local officials stood before hundreds of film workers to profess their support for the incentives.

At one point, the lawmakers and workers all chanted together: “Film equals jobs! Film equals jobs!”

Job numbers vary widely

Sorting out exactly how many jobs is difficult.

Before she left office, Gov. Bev Perdue, a Democrat, issued a news release that said film productions created “nearly 20,000 job opportunities” in 2012 alone. Even the state’s film office acknowledges that is a “vague” description.

Film companies reported employing about 14,000 people in films here last year, although many of those were “extras.” The Wilmington Regional Film Commission says there are 4,000 “well paid, clean” film jobs in the state, based on data from the state’s film office.

Federal labor statistics put film jobs in a range from about 800 production jobs to as many as 4,000 when dozens of related classifications are counted, from riggers and electricians to ticket takers and fast food workers at theaters.

Patrick McHugh, a fiscal analyst for the General Assembly’s nonpartisan Fiscal Research Division, studied the impact of the film credits and issued a memo to Senate leaders in January.

His study looked at a reported $30 million in incentives given to film productions in 2011. (That figure was revised this week to $37.5 million.)

McHugh’s report acknowledged that it is “impossible” to know precisely how many jobs were created by the incentive. But, using an economic model, his study determined that the incentive likely attracted 55 to 70 new jobs – with a payroll of $2 million – to the state in 2011 “under the most plausible assumptions,” a range that film industry supporters dismiss as implausible.

His report put the total number of film jobs in the state at between 1,650 and 2,000.

Jeb Hardison had one of them. At last month’s rally, he printed a sign that said: “NC Films has kept me off unemployment for 3 years!”

Hardison, 29, of Southport said he has worked on a range of projects as either an extra or a “stand in,” someone who fills in for an actor while a scene is set up. The work pays mostly minimum wage to as much as $15 an hour, he said, and it has allowed him to live “outside of the standard molds.”

“I worked a corporate job and wasn’t happy,” he said. “Working in film has been great. The idea that they would want to do away with it just baffles the imagination.”

Other “extras” turned out at the rally, carrying signs or marking T-shirts with lists of movies and TV shows in which they took part.

More jobs from tax cuts?

Critics say the money that went to film production companies in a single year could be better spent.

As part of his report, the legislature’s fiscal analyst tried to answer what would happen if the film money were used differently: What if the state instead made an across-the-board reduction in business taxes equal to the reported $30 million film incentive payout in 2011?

The result was that “reducing business taxes across the board would generate more new economic activity in North Carolina than is likely generated through the Film Credit,” according to the report.

It said the film incentive “created 290 to 350 fewer jobs than would have been created through an across-the-board tax reduction of the same magnitude.”

The Job Development Investment Grant program, the state program to give cash grants to companies in exchange for permanent jobs, is credited with creating far more permanent jobs than the movie tax break. And for less money.

From 2004 through 2011, the JDIG program spent about $75 million and is responsible for 23,000 jobs, according to the state Department of Commerce.

One recent example: Linamar Corp., a manufacturer of engine parts in Asheville, announced a 250-job expansion last year. It is eligible to receive up to a total of $2.6 million over nine years.

Commerce Secretary Sharon Decker, who oversees the state’s film office and has voiced support for the tax break for movie production companies, declined an interview request.

Film supporters say cutting the incentive would mean the end of filming in the state.

That’s because other states are offering incentives, from Louisiana to Georgia to South Carolina, which last month fast-tracked legislation in trying to ensure a TV series continued filming in Charleston. New Mexico had been a leading state for filming as a result of its robust tax incentive, which was similar to North Carolina’s. But cutbacks led to a downturn in filming there and now, according to news reports, the governor and lawmakers are scrambling to lure the industry back with an even larger tax incentive.

Former Rep. Danny McComas, a Wilmington Republican who helped write the current law, said he would prefer that no states offered breaks for films. But North Carolina has to compete for them, and so he worked hard to get it through.

State Rep. Susi Hamilton, a Wilmington Democrat, has embraced the industry.

“They come to town. They hire hundreds of people. They spend a bunch of money. They go away,” she said. “And the film industry goes away if this credit goes away.”

Last year, Hamilton helped broker a deal that extended the film incentives by a year, ensuring they are in place through 2014. She took flak at the time because she also broke with her party to support a controversial piece of legislation that advanced “fracking,” a method to extract natural gas from underground. Her vote on fracking garnered film incentives support from Republican leaders.

“I’d take that vote again,” she said in an interview.

At the time of the vote swapping last summer, she had moved out of her home. She acknowledged in an interview that a film worker took over her house in downtown Wilmington for three or four months last summer, covering her mortgage payments. She said the renter paid roughly “a couple grand” a month.

She likened the situation to when people who live near big golf tournaments give up their homes to visitors. She said she rented a place to live elsewhere.

At the downtown rally last month, she implored film workers to let lawmakers know how important the tax break is and that filmmaking “touches” many across the state.

The film incentive is like other special breaks in the state’s tax code: It has lobbyists who fight for it, lawmakers who protect it, and residents who say they depend on it.

Film workers were alarmed last month when several members of the House, including speaker pro tem Paul “Skip” Stam of Apex, filed a bill that would wipe out the word “refundable” from the tax law. It effectively would kill the incentive, film supporters say.

Other lawmakers jumped to assure the jittery film industry.

State Sen. Thom Goolsby, a Republican from Wilmington, stood in front of hundreds of film workers last month along the downtown riverfront. He said that he had made sure the film credit was protected during the sustained budget slashing of recent years.

“That money was the best money we spent in the budget, to keep you all employed,” Goolsby said.

His voice rising, he said Wilmington lawmakers would engage in “hell-raising” to make sure the tax incentive survives.

Goolsby’s colleague, state Sen. Bill Rabon, is a Republican playing a key role in discussion of tax legislation.

Rabon, co-chairman of the Senate Finance Committee, told the crowd that said he saw a movie being filmed outside his front door in Southport last year.

“I know first-hand what the film industry has done,” he said.

The StarNews of Wilmington reported that producers paid him for use of a boat slip he owns there; he said in an interview the payments also covered the use of his back yard.

Rabon said he was glad to have worked to keep the tax break in place through 2014 and said he will also fight to ensure it isn’t “tampered with.”

Rabon told the cheering crowd in Wilmington: “Count on me for my support.”

 

 

So Brian tell me...what's the end game or ideal in your view?

 

All state tax credits are shut down and 100% of world wide film production is carried out in the LA area?

 

Because as you've pointed out, words to the effect of, "many people in the film industry have homes in LA which are very expensive and they need jobs to support those mortgages."

 

R,

You meant to write, "All state tax bribes are shut down..." instead?

New audit says Louisiana spent $800 million on film production tax credits over last 5 years

Cut through the film tax credit fiction

http://triblive.com/opinion/colinmcnickle/3843912-74/tax-credit-film#axzz2R4Pt0K4Z

By Colin McNickle

 

There was an interesting cluster cluck in Harrisburg Wednesday last — a joint hearing by the Senate and House Democratic Policy committees on Pennsylvania's Film Tax Credit Program.

The credit “is a glowing example” of a legislative success story that has led to jobs and economic development, said state Sen. Lisa Boscola, D-Northampton, in a news release after the session. “When we help business expand, hire more workers and invest in our economy, many of our funding and budget challenges will take care of themselves,” she wrote.

Would that it were true.

The tax credit was adopted in 2007. To be eligible, motion picture or television projects must spend 60 percent of their respective shoots' budgets in Pennsylvania. Only then is a 25 percent tax credit applied to qualifying production expenditures. Proponents claim the credit is directly responsible for the creation of 18,000 jobs and $739 million in wages. They also claim “economic activity” of nearly $2 billion.

Supporters say the current annual allotment of $60 million is not enough, evidenced by the fact that it's exhausted quickly and leaves too many productions credit-less and, thus, headed to other states with larger incentives.

Pennsylvania's cap is “damaging” and “unrealistic,” union types argue; the Keystone State must create “a competitive tax incentive” program to keep production here, they add.

Never mind the growing scholarly research that suggests the “benefits” of the tax credit are as fictional as the Hollywood efforts they subsidize. Worse, most of the reportage on the topic is cheerleading that accepts proponents' win-win claims as gospel.

One of the freshest studies to question the benefits of the film tax credit came last fall from University of Pittsburgh researcher Ashley W. Edwards. “While it is tempting to say that Pennsylvania can and should try to create economic diversity by developing and supporting a film industry until it can sustain itself without a tax credit program, a closer examination of the policy reveals three major problems,” she writes:

• It's difficult to predict the productions' actions if no tax incentive is available; many films and programs have been, are and would be produced without it.

• The “race” against other states' incentive programs to attract productions creates a never-ending battle; it's an arms race with your wallet — a “race to the bottom.”

• The film tax credit “generates a net loss of tax revenue for the state and does not create the purported number of jobs”; many are low-skilled or “shifted,” temporary and with no upward mobility; industry-generated studies claiming otherwise are biased.

Ms. Edwards also reminds that the film tax credit is transferable — “the production company may sell its remaining tax credits to other Pennsylvania taxpayers,” she reminds. And in fiscal 2011-12, 98 percent ($64.3 million worth) of film tax credits “were either sold or transferred to another entity, with just $1.4 million used by the initial tax credit recipient to reduce its Pennsylvania tax liability.”

Taxpayer wealth is transferred to “affluent third parties,” notes Edwards, who also exposes a number of transparency failures and accounting tricks by the king of such nonsense, the Pennsylvania Department of Community and Economic Development.

“The Legislature must look beyond the local media and their starry-eyed constituents and carry out more balanced studies to study the real costs and benefits of the film tax credit,” Edwards concludes.

Indeed, it's time to expose this cluster cluck once and for all.

 

Colin McNickle is Trib Total Media's director of editorial pages

Milke: Lights! Camera! Massive film subsidies!

Here in Ohio, we have a pretty nice film credit program. I am going on memory of details, so bare with me here. I credit is refundable, and amounts to 35% of all in-state production expenses. The caveat though - you must spend at least $500,000 in the State. Well, there is the problem. $500,000 is more than most Indie films can shoot with. Hollywood films could afford it, but would choose to save more money by going to a State (or Country) with even better tax incentives. With this, I highly doubt that the credit is used very often and it certainly does not "increase employment" very much in our State, of that I'm pretty well certain.

 

My opinion on the whole tax credit thing is this: They are great, if your production is big enough the meet the minimums. However, if your production IS big enough, should we REALLY be refunding money? Seems to me like Hollywood can afford it.

Yep. No large Corporation needs a "tax incentive" to operate. It is just a give-away, Corporate Welfare, and a vehicle being used to blackmail cities/States/nations against each other to see who is willing to hand over the biggest bribe.

http://realfilmcareer.com/film-industry-doesnt-need-more-tax-dollars/

 

Film industry doesn’t need more tax dollars

http://www.vancouversun.com/entertainment/movie-guide/Film+industry+doesn+need+more+dollars/8226304/story.html

If credits are the only thing bringing the productions here, we can’t afford to keep enticing them

VANCOUVER SUN

Shakedown, The Sequel, was previewed in B.C. this week as NDP leader Adrian Dix announced that if he becomes premier he will surrender to the latest in a series of escalating demands from the film industry.

Eight years ago in this space, we compared the way the film industry plays off jurisdictions against one another as the financial equivalent of the casting couch.

Just how far are British Columbians willing to go to match the inducements flaunted by Ontario, Quebec and countless other cities, counties, states and countries?

At the time that editorial was written, B.C. was offering film producers a 25 per cent credit for labour costs. In response to a sweetener offered by Ontario, the government here increased that incentive to 33 per cent, where it stands today.

Ontario and Quebec have since increased their subsidy in the form of tax credits worth 25 per cent of all production costs. The industry here is again talking about fleeing the province for greener pastures.

Recently, the provincial government wisely said enough is enough. Community, Sport and Cultural Development Minister Bill Bennett announced some alternative measures to support the industry, but said that we can’t afford any more subsidies.

Dix says an NDP government would sweeten the pot to attract filmmakers with another increase in the tax credit on labour to 40 per cent.

He argues, as does the industry, that we have built up a large skilled workforce in B.C. and significant infrastructure for the moviemaking business and that it is worth keeping.

There is no argument about that.

On its own merits, the film production industry is a great one to have in this province and especially in Vancouver. It is labour intensive and provides good wages, it’s essentially green and it gives the city and the province a good profile beyond our borders.

But the industry doesn’t seem prepared to exist on its own merits. It has quite successfully been able to play one jurisdiction off against another to exact incredible subsidies.

So how far should we be willing to go to keep it here?

The problem with that question is that we know at some point when we are competing on price we will lose out to some other jurisdiction that is more desperate.

In a finding consistent with other jurisdictions that have looked at the issue, Simon Fraser University economist Rhys Kesselman argued recently that at current levels, it is costing B.C. more than $100,000 for each job we save at the current level of subsidy. That’s a terrible deal and raising the subsidy will only make it worse.

It’s time for provinces to get together and decide on a common bottom line. Competing with each other is a fool’s game that is only enriching foreign movie producers at our expense.

That won’t solve the problem of jurisdictions outside our borders that are more desperate for the industry’s attention.

Louisiana offers a tax credit of 35 per cent on all expenditures in the state and the movie business is reportedly booming.

But if price is the only thing that keeps the industry here, it’s an industry that we can’t afford to keep, no matter how much we like rubbing shoulders with the stars.

It’s past time to call the industry’s bluff.

Memo claims NC film incentives brought in less jobs than expected

http://realfilmcareer.com/memo-claims-nc-film-incentives-brought-in-less-jobs-than-expected/

 

http://www.wect.com/story/21947108/general-assembly-memo-claims

By: Jon Evans

WILMINGTON, NC (WECT) – A memo generated in the North Carolina General Assembly says the state’s Film Incentive Tax Credit has not generated as many jobs as many people thought.

The memo, generated in January and delivered to Senator Bob Rucho (R-Mecklenberg) by the Fiscal Research Division of the Legislative Services Office, comes in the form of an eight-page memo.

[Click here to read the memo in its entirety]

The findings show “the Film Production Credit likely attracted between 55 and 70 new jobs to North Carolina in 2011, which is 290 to 350 fewer jobs than would have been created through an across-the board tax reduction of the same magnitude.”

The report goes on to say “However, as there is no way to directly measure the economic impact of the Film Credit, the REMI model provides an informed estimate of how the Film Credit impacts business activity in North Carolina.”

The memo explains that “the Regional Economic Models Incorporated (REMI) PI+ model…. estimates how the economic system would react to changes in the policy environment, so the results are only estimates.”

The memo does not show any figures or statistics from 2012, when several large productions began shooting in southeastern North Carolina, including Iron Man 3, Safe Haven, and the NBC show Revolution.

“The report doesn’t reflect what is happening in North Carolina’s Film Industry,” said Aaron Syrett, the Director of the North Carolina Film Office. “The film industry put about 4,000 North Carolinians to work as well paid highly skilled crew members and actors, in addition to 22,000 as film extras. In 2012 the industry spent $376 million directly in our local communities.”

Johnny Griffin, head of the Wilmington Regional Film Commission, said the study did not rely on date from the North Carolina Department of Revenue, which audits all projects that film in the state.

Griffin said the proof is in the numbers.

“We’ve seen production go from in 2010, $43 million dollars being spent to last year about $247 million being spent here,” he said. “So, the incentives have done exactly what they were meant to do which was to bring productions to the area.”

Griffin said it isn’t clear where the numbers used in the study are from and that local and state film leaders weren’t consulted as part of the report.

“There are hundreds of people who work in the area every day,” he said. “I can show you one project alone that created $15 to $20 million in payroll. To read in a report that they can only show $2 to $3 million in wages that have been created, I don’t know where that information is coming from. It just doesn’t make any sense.”

He said if state leaders are planning on stopping the incentive program, it would harm the local economy.

“If the incentives were to go away altogether, basically, the majority of the film business would just leave,” he said.

North Carolina’s Film Tax Incentives are set to expire on January 1, 2015 according to the NC Film Office.

Audit: Film tax credits cost state millions

 

http://www.wwl.com/pages/15932821.php?contentType=4&contentId=12714649

Don Ames Reporting

Governor Jindal’s new tax plan proposal has Hollywood South concerned, with some in the industry fearful that changes in the state’s Motion Picture Investor Tax Credit program could bring the booming business to an end.

The tax credits, begun in 1992, have made Louisiana a favorite for film companies over the past decade, and one of the hottest locations for TV and movie making outside of Los Angeles and New York.

Under the state program, companies can obtain a tax credit for up to 35 percent of the money they spend while broadcasting or filming in Louisiana.

But, a recent 5-year study by the state Legislative Auditor’s office says the state’s many tax rebates and tax credits across several industries, including movies and TV shows, have cost Louisiana some $6 billion.

The Executive Director of the Louisiana Office of Entertainment Industry Development, Chris Stelly, says that report is not quite accurate.

“The report spoke to all exemptions and tax credits that the state administers, across the board.” says Stelly. “So, the film industry does not cost the state $6 billion dollars. I think that number was right around $500 million or $550 million over the course of five years.”

And, Stelly says the report did not focus on economic impact, which he says is just as important.

“Every tax dollar that we issue in the form of a tax credit generates about six dollars to the economy,” Stelly says. “So you’re looking at, over that course of five years, well over a billion dollars in economic impact to the state.”

In fact, Stelly says the economic impact could well be a billion dollars a year, on average.

State Auditor Darryl Purpera says tax credits during the 5-year period accounted for the loss of $5.4-billion from state coffers. He says tax rebates account for more than $730-million in revenue losses. And, he says a healthy portion of the losses are from the state’s film and TV tax incentives.

However, he admits the audit didn’t look at their merits or the economic stimulus the film industry may have generated.

A proposed plan by the Jindal administration would impose a cap on the amount that can be written off for actors’ salaries at $1 million per person and not allow certain film production costs to be covered by the program. There is currently no cap on actors’ salaries.

That cap, it’s feared, could make Louisiana less attractive to do larger productions which might move to competing states, like Georgia.

The Celtic Media Center in Baton Rouge and Second Line Stages in New Orleans were built to service large-budget productions.

It’s estimated that around 14,000 people work in the film industry in Louisiana.

A Change.org campaign to protect the state’s film industry tax credit program has gained support from more than 1,500 industry workers and supporters, including movie extras, set electricians and technicians.

The tax credit change could very likely jeopardize plans for a $50 million film production campus in Algiers.

Louisiana Economic Development secretary Stephen Moret has said the Jindal administration is committed to the film industry and the proposal would have “a negligible impact” on many of the productions.

The legislature will consider the governor’s tax proposal in its upcoming session. If approved, it would take effect on January 1.

“I certainly don’t see anyone pushing to eliminate the Motion Picture Incentive Program altogether,” says Stelly. “There’s some ideas out there, and there are some reform measures taking place. We’ll just see where it goes.”

There are several projects in varying stages of production in New Orleans right now.

The feature film ‘Heat’ starring Jason Statham and Sofia Vergara begins shooting in New Orleans today, April 1st, and will be in town for 8 weeks.

Other projects currently in pre-production and/or filming in and around New Orleans include:

Fox feature film “Dawn of the Planet of the Apes” starring Gary Oldman, Keri Russell and Jason Clarke, until July 14.

Fox feature film “Devil’s Due” starring Zach Gilford and Allison Miller, through May 1.

Mandalay Pictures’ feature film “When the Game Stands Tall” for 7 weeks.

AEI’s feature film “The Kennedy Detail” for 6 weeks.

An HBO Entertainment’s television series currently going by “Untitled Detective Project,” starring Matthew McConaughey and Woody Harrelson, is shooting until June.

ABC Studios television pilot “Reckless” has just concluded filming in New Orleans.

Independent feature film “Jingle Doggie” is slated to begin shooting in May.

http://realfilmcareer.com/b-c-urges-ontario-to-harmonize-film-tax-credits/ B.C. urges Ontario to harmonize film tax credits

http://realfilmcareer.com/five-reasons-government-subsidies-for-films-are-a-bad-idea/

Five Reasons Government Subsidies For Films Are A Bad Idea

Brian,

 

Now here's an example of where the marriage of government and the film industry has gone right. And frankly I was the one that started it all. I shot the Dogfather in Parry Sound in 2009. I know none of you have ever heard of Parry Sound, it's a small town, a one hours drive North from my house.

 

Since then there has been a staggering number of features shot there because of it's only 2 hour drive from Toronto airport, and availability of funds from the NOHFC, mentioned in the article. The NOHFC funds are NOT a tax credit, or bribe (as you like to call them) they are an equity program available to Ontario residents only.

 

Would you believe that while I was shooting Against The Wild in Parry Sound last October there were TWO other features shooting there at the same time! And this is a town of only 7, 000! One of the others starred Meatloaf and you'll see the pic of him in the attached magazine article.

 

As I write this there is a Hallmark Channel Christmas movie shooting in Parry Sound right now, called Pete's Christmas. Starring Bruce Dern and Zach Gordon. The benefits to the local economy are obvious and not up for debate. For my two films alone I poured multiple hundreds of thousands of dollars into the local economy. Kinda of cool to think that all those people seen in those Dogfather pictures had employment because of me.

 

I can only attach 2MB of files and I have three pages from this article.

 

R,

So, you and the other productions have promised to employ locals consistently with weekly paychecks for the next 50 years? Or did you just move in, take what you needed from their local economy, then bolt, taking your profits with you even though BECAUSE of their bribes, you were able to make your product? Shouldn't Parry Sound be a co-producer in that they essentially co-financed your movie? What is the town's cut?

BTW, According to the Michigan Fin report for 2012 Revenues of 56.1 Billion exceeded expenses of $51.8 billion.

 

Pg 16

 

http://www.michigan.gov/documents/budget/CAFR_FY_2012_413282_7.pdf

 

Assuming Michigan spent 50 billion in 2010, film incentives to Disney cost .0008% of the provincial budget. So, if roads aren't being looked after. If sewers are falling apart. The problem isn't overspending on the Arts.

 

Funny how people are so quick to pull out the infrastructure canard when talking about arts funding, but nobody ever questions spending on incentives for other industries. eg computer, manufacturing etc.

Obviously, cities/States/Nations have economic difficulties that are multifaceted. "Arts" spending is but a small part of the puzzle. It's hardly a "canard" to point out that it is ridiculous for "governments" to try to play in the movie-making sandbox by bribing movie studios with money they don't really have. There has yet to be ANY government to prove that it's "incentives" actually create a profit as a result of those "incentives." So far EVERY State in the USA which has had an honest audit has shown that their specific "incentives" for film production prove to be at a loss, not a net gain, for their local economies.

Naturally, Fascists here and elsewhere will laud "incentives" as "necessary" and proclaim that "They work!" because those at the top profit by squeezing governments and crew in the race to the bottom while profits on the end-product have consistently risen thus increasing payouts for everyone except crew and the governments that were so generous.

Someone might have a case to justify an "incentive" for a factory which will employ hundreds of locals for years on end. But the film industry specifically is like a swarm of locusts, moving in to rape a location for whatever it needs it for, then it leaves days or weeks later, never to return. There is promise of long term local employment for things like computers or manufacturing in large factories, but the film industry isn't like that on any level. The comparison is nonsense.

Oh look, ANOTHER State running the numbers to discover that they are being robbed:

The state’s film tax credit program cost taxpayers $44.1 million in 2011, creating 497 new jobs for Massachusetts residents and sparking $38.7 million in net economic impact, according to a new report from the Department of Revenue.

So let's see.... taxpayers doles out 44.1 million and "sparked" $38.7 million back. That would be a deficit of $5.4 million.

Toss that into the pile with the recent Louisiana audit that found a loss as well.

Please, anyone, tell the class again why tax "incentives" are beneficial to the industry and crew who actually make the movies?


http://realfilmcareer.com/report-details-costs-benefits-of-states-bid-to-lure-film-industry/

Louisiana Lawmakers Stunned About Cost of Film Subsidy Program and Admits LOSS

Published on Mar 11, 2013
For every $1 in tax revenue generated by the direct and indirect economic impact from film spending in Louisiana, the cost to the state was $7.29 paid OUT from state coffers. In this video, Stephen Moret, Secretary of LED, is awkwardly forced to admit massive loss on investment.

‘Oz’ film costs Michigan taxpayers $40 million

http://dailycaller.com/2013/03/13/oz-film-costs-michigan-taxpayers-40-million/

 

Thanks to Michigan’s film subsidies, the production of Disney’s “Oz the Great and Powerful” forced the state to pay nearly $40 million to Hollywooders critics consider the Wicked Witch of the West.

Back in 2010, Michigan’s film incentive program was the most generous in the nation, offering studios a 42 percent refund of all in-state production costs. It was enough for Disney to click its heels three times and say, ‘There’s no place like Michigan.’ Thus production of its “Wizard of Oz” prequel film, which premiered last week, took place in the Great Lakes State.

With a $100 million in-state budget, the estimated cost to taxpayers is about $40 million, according to the Mackinac Center for Public Policy.

“It just comes right out of taxpayers’ pockets,” said James Hohman, assistant director of fiscal policy at Mackinac, in an interview with The Daily Caller News Foundation.

 

The costs continue to roll in. The film’s production company, Emerald City Film Inc., had trouble making its bond payments — forcing the state to provide even more financial assistance.

“I don’t like that [the money] went out of the state and continued to enrich millionaires and billionaires with government subsidies,” said state Rep. Tom McMillin in a statement.

The goal of the incentive program is to persuade film studios to relocate to Michigan and create a long-term source of economic growth for the state. But in practice, Michigan’s quest to become the Hollywood of the Midwest is as troubled as a Kansas farm during tornado season.

“Despite having subsidized this industry more than anyone else had been, we don’t have a single viable film studio,” said Hohman. “Even if we did, it wouldn’t be worth the hundreds of millions of incentive dollars we’ve offered this industry.”

Film studios tend to hop from state to state, chasing the latest and greatest subsidy. They seldom establish long-term operations anywhere but California.

“MPIs [motion picture incentives] create mostly temporary positions with limited options for upward mobility,” concluded William Luther, an adjunct scholar at the Tax Foundation, in a 2010 report.

After taking office in 2010, Michigan Gov. Rick Snyder capped the subsidy at $25 million to prevent studios from cashing in on what Luther called a “preposterously generous” incentive. Snyder and the legislature later agreed to raise the cap to $50 million for fiscal year 2013.

The incentive isn’t worth continuing in any amount, said Hohman.

“It’s not producing a viable film industry, and even if it did, it still would never be worth the expense,” said Hohman.

Follow Robby on Twitter

Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

If giving millions to the film and TV industry is so great, why all the secrecy?

http://realfilmcareer.com/if-giving-millions-to-the-film-and-tv-industry-is-so-great-why-all-the-secrecy/

http://blog.syracuse.com/opinion/2013/03/tax_credits_for_film_industry.html

By Editorial Board

We hope you read the stories written by Michelle Breidenbach last week about the state’s tax credits to companies that make movies and TV shows and the secrecy surrounding their tax breaks. You can see the list of stories on the right.

Here’s a quick summary: New York state created the tax credit program in 2004 to lure films and productions to the state. At first, the state budgeted $25 million a year for the program with an expiration date of 2008. Before the program expired, legislators increased the amount to $60 million, then upped it by another $5 million every year, and finally started increasing it by the hundreds of millions of dollars. This year, the state has budgeted up to $420 million.

Gov. Andrew Cuomo has asked legislators in this year’s $142.6 billion budget proposal to extend the credit for five more years, to continue at $420 million a year.

That’s $420,000,000.

That’s more than the state spends for the Environmental Protection Fund: $153 million.

More than the state spends to promote high-tech and manufacturing: $70 million.

More than the state spends on a new program proposed this year to promote state agricultural products: $2 million.

Cuomo’s economic development office, Empire State Development, won’t say where the $420 million goes. Why? To protect moviemakers’ trade secrets. The state contends that revealing how much of your money individual companies received would reveal the film’s total budget, which would put them at a disadvantage when they try to market the film or TV show to investors and advertisers. Further, the state said making the money details known would make it difficult to negotiate with talent, crew and vendors.

That’s a head-scratcher.

Couldn’t any company that bids on any government project – a road, a building, a computer contract — make the same claim? Couldn’t a construction company say that details of its government contract reveal budgeting and estimating information to its rivals? Couldn’t it say that contract details would hinder negotiations with labor, crews and vendors?

We think the public benefits when people know exactly how their government spends their money.

When private film studios and private television producers turn to the public treasury for money, they forfeit secrecy. If a moviemaker or a producer worries that revelation of tax-benefit details will put them at a disadvantage, then they shouldn’t apply for credits.

Does this provision of secrecy extend forever? What’s the harm of releasing the details after the film is made, released to theaters, made available on DVD and relegated to late-night cable TV? The budgets and contracts are over and done with.

Supporters say the program boosts New York’s film industry and accounts for “126,150 jobs and $2.2 billion in new spending.” Can those claims be independently verified? Frankly, we’re skeptical, the same way we were skeptical of Empire Zone job claims.

And further, if New York views these credits as not only supporting an industry, but as benefiting art and culture, we suggest the money might be better spent supporting art and music programs in public schools, which are eroding under budget constraints.

So if you missed them, read the stories. It’s worth your time. There’s a lot more in them than we can recount here in this editorial. And read this heartfelt letter from reader Kevin Curtis, of Cazenovia, who writes about how the state’s failures contribute to his children moving elsewhere for better jobs.

State Sen. Michael Gianaris, of Queens, called the film tax credit program “the single most successful economic development program in the last decade.”

And despite those glowing words, staff from the governor’s film office declined to talk about it with our reporter.

Think about that a second.

When the local cat shelter gets a new litter box thanks to a government grant, the pols trip over themselves to get onto the podium and into the group photo. But in this case they won’t speak about the “single most successful economic development program in the last decade” that costs taxpayers hundreds of millions of dollars?

Wow. Wow. Four hundred and twenty million times wow.