Scott Wilk has a piece on the need for yet more film (and manufacturing) tax incentives in California in order to compete with other states. He says:
That's a pretty bold claim, right? Wilk seems to recognize that there's an arms race among the states going on in the dry-yet-sexy world of film tax credits, and he's saying if we follow his prescription, we'll win that arms race.
How does this work out in the real world though?
In September, the Times had a great article discussing whether these film credits actually work. Tax credit boosters say that we, the California taxpayer, are handing out about $10,000 for each job created or saved in the film industry in California. Assuming that that worker you and I are subsidizing goes on to spend his money here, and that his production isn't canceled early, that's not such a bad deal right? I can think of a lot of worse ways to spend $10,000.
But the Times also found that other states are spending upwards of $300,000 per film job with their film incentive programs. That's an absurd amount! For that amount, we might as well hire six unemployed guys at $50k per year to dig a hole in the ground and then fill it back up. That'd be a more effective way to spend the money!
And yet Wilk seems to think we need to compete with that state.
The Times didn't use the term, but what's obviously going on here is a race to the bottom. Film productions & companies are playing the states off against one another, and they skip and jump from state to state depending on how aggressive the tax package is. That's why you see productions jumping from California to Louisiana; it's not that we tax productions at too high a level, it's just that Louisiana decided to take it in the shorts by offering a bigger carrot than we do. But that won't last long; Alabama or Georgia will get even more aggressive than Louisiana and soon those jobs will flee there.
It's a race to the bottom in which only the film company wins and victories for a state's economy are fleeting and never permanent.
But wait! Wilk says we can "eliminate the competition" if only we extend yet more tax credits (in other words, spend more) to post-production houses. Color me skeptical. What's to stop Georgia from creating a tax incentive more aggressive than the one Wilk envisions? Answer: Nothing!
I think the real solution to this problem is at the federal level. Call me crazy, but if we had a carbon or consumption tax that penalized productions for filming so far away from their base of operations, they wouldn't be so eager to leave California and go off to Toronto or Louisiana (or Mexico, or Australia!) just to save a few bucks. A major feature film is a big deal and it involves big trucks, airplane flights, diesel generators, and all sorts of other energy use that isn't taxed and has an impact on the environment.
Yes we'd be applying a stick rather than a carrot to encourage film companies to produce shows and features locally, but at least the playing field would be level and the taxpayer wouldn't be getting reamed again and again.
But that's not on the agenda and probably never will be.
I'm disappointed Wilk can't think more outside the box on this; he essentially wants to spend more of our money to subsidize productions and has no way of guarantying other states won't match or beat our offer.
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Wilk on film tax policy
In the Film and Television industry, productions are replacing our film-friendly California locations with New York, Louisiana and even Canada. Did you know that the film industry alone comprises 7% of Santa Clarita’s workforce?
Other states have seen rapid growth in their film industries because of generous tax incentives and lower overall production cost. In fact, Louisiana reaped more than $900 million in film production last year.
They were able to do experience this growth because they offer a tax credit program that far exceeds what California offers. The Legislature recently extended the film tax credit we do offer, but we can do more.
Too often on this issue in the legislature is divided by Northern California versus Southern California. If we increased the amount of the tax credit and allowed the credit to include post-production facilities, we could eliminate this competition and create an environment where the film industry will thrive in both Silicon Valley and in the Thirty-Mile Zone (TMZ).
That's a pretty bold claim, right? Wilk seems to recognize that there's an arms race among the states going on in the dry-yet-sexy world of film tax credits, and he's saying if we follow his prescription, we'll win that arms race.
How does this work out in the real world though?
In September, the Times had a great article discussing whether these film credits actually work. Tax credit boosters say that we, the California taxpayer, are handing out about $10,000 for each job created or saved in the film industry in California. Assuming that that worker you and I are subsidizing goes on to spend his money here, and that his production isn't canceled early, that's not such a bad deal right? I can think of a lot of worse ways to spend $10,000.
But the Times also found that other states are spending upwards of $300,000 per film job with their film incentive programs. That's an absurd amount! For that amount, we might as well hire six unemployed guys at $50k per year to dig a hole in the ground and then fill it back up. That'd be a more effective way to spend the money!
And yet Wilk seems to think we need to compete with that state.
The Times didn't use the term, but what's obviously going on here is a race to the bottom. Film productions & companies are playing the states off against one another, and they skip and jump from state to state depending on how aggressive the tax package is. That's why you see productions jumping from California to Louisiana; it's not that we tax productions at too high a level, it's just that Louisiana decided to take it in the shorts by offering a bigger carrot than we do. But that won't last long; Alabama or Georgia will get even more aggressive than Louisiana and soon those jobs will flee there.
It's a race to the bottom in which only the film company wins and victories for a state's economy are fleeting and never permanent.
But wait! Wilk says we can "eliminate the competition" if only we extend yet more tax credits (in other words, spend more) to post-production houses. Color me skeptical. What's to stop Georgia from creating a tax incentive more aggressive than the one Wilk envisions? Answer: Nothing!
I think the real solution to this problem is at the federal level. Call me crazy, but if we had a carbon or consumption tax that penalized productions for filming so far away from their base of operations, they wouldn't be so eager to leave California and go off to Toronto or Louisiana (or Mexico, or Australia!) just to save a few bucks. A major feature film is a big deal and it involves big trucks, airplane flights, diesel generators, and all sorts of other energy use that isn't taxed and has an impact on the environment.
Yes we'd be applying a stick rather than a carrot to encourage film companies to produce shows and features locally, but at least the playing field would be level and the taxpayer wouldn't be getting reamed again and again.
But that's not on the agenda and probably never will be.
I'm disappointed Wilk can't think more outside the box on this; he essentially wants to spend more of our money to subsidize productions and has no way of guarantying other states won't match or beat our offer.
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