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Show Me The Tax Credits!

States hoping to cash in on a share of Hollywood production dollars have scrambled over the past decade to create incentive programs that could lure film studios both big and small.

States and some local governments issue the incentives, which include cash rebates, tax credits and deductions. In exchange, film companies are required to spend a certain amount of the budget within the state. That includes things such as hiring local production crews, using local banks to pay employees, and contracting with local businesses for services such as catering and transportation.

While not everyone agrees such incentives make good economic policy, the trend is indisputable: the number of states offering such programs has exploded.

Below are maps showing, for 2002 and then for 2009, the states which offer some kind of financial incentive to movie production companies. Further explanation follows.

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The data come from two organizations, each more or less falling into opposite camps. The 2002 map uses information from a report by the Tax Foundation, which represents itself as a nonpartisan tax research group based in Washington, D.C. According to the organization, five states and the territory of Puerto Rico already offered some sort of incentive that year.

The 2009 map relies largely on data from Entertainment Partners, an industry organization that offers, among many other services, assistance to production companies in navigating and maximizing the numerous incentives now available (and which, it should be disclosed, processes some KCET employee paychecks).

In its report, the Tax Foundation argued that production incentives are unlikely to generate much wealth in the long term. States are taking "unnecessary risks with taxpayer dollars" in return for which "they attract mostly temporary jobs that are often transplanted from other states," the author claimed. You can read that report here.

In response to our inclusion of the Tax Foundation data, a representative of Entertainment Partners sent along several links to articles and reports defending the effectiveness of the incentive programs here.

It should also be noted that the two organizations applied slightly different standards in accounting for incentives nationwide.

The Tax Foundation lists any state that offered any kind of incentive, down to simple sales tax relief or a break on hotel occupancy tax for visiting film crews. Entertainment Partners lists only those states which had formal programs enacted through legislation. We used the same standard as EP for the 2009 map, but despite the difference in methodology, the numbers are almost identical.

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