States' Tax Welfare For Hollywood A Really Bad Idea
Jazz Shaw writes at Hot Air about the massive tax breaks given to Hollywood productions by various states. Here's how it worked in New York, reports Joseph Spector at the Press & Sun Bulletin:
Nearly two-dozen studios raked in more than $1.5 billion in rebates from New York over the past nine years as the state rapidly expanded its incentives to lure in movies and shows.At a time when upstate New York is battling job losses and Gov. Andrew Cuomo is trying to entice new companies through tax incentives, it's Hollywood that is one of the biggest beneficiaries of the state's largesse...
NBC/Universal was by far the leader in rebates awarded between 2006 and 2014, getting back a whopping $320 million for up to 30 percent of its production costs to film in New York.
Sony/Columbia was refunded $200 million, while HBO got $198 million, the WB got $185 million and CBS received $171 million, the records obtained by Gannett through a Freedom of Information request showed.
The figures were staggering to critics of the program, who said the money should be used instead to help existing businesses in New York, particularly in regions trying to recover from decades of decline in manufacturing jobs.
Overall, $423 million was sent back to studios in 2014 - with the most, $117 million, returned to CBS, said Empire State Development, the state agency that runs the program.
Shaw notes:
And how much does this really bring into the coffers of the city and the state? Not that much, really. It's a very brief infusion. The jobs they create are short term and generally low wage. It's true that the amount they spend is a nice injection for some local restaurants and hotels, but that only helps a handful of businesses and none of it produces long term growth. And none of this addresses the weeks at a time when they can simply shut down traffic and inconvenience everyone in the area.The amount of money that the government is giving back pretty much wipes out most of the benefits, and how many people really decide to pick up and move someplace new based on the backdrop to a a movie? Shouldn't the competition at the state government level be going toward sustainable growth and attracting businesses which will actually stick around and build communities? These figures are pretty staggering, particularly for smaller cities trying to get a piece of this pie. Voters need to speak up and let local leaders know that it's their tax money being given away at home and the profits are all going to the studios and networks. (They aren't really hurting for profits in most cases, by the way.)
via @Instapundit
This is the classic example of why targeted taxes and targeted tax breaks don't work.
The majority of people work in small businesses. The majority of economic growth areas experience are generated by their small businesses. But because they are small they lack the political power to shape these laws or get these kinds of benefits. Instead a small group of wealthy companies reap the majority of the benefits.
The same applies to tax the rich strategies. Once again the numerous poor pay the majority of the tax while the rich find a way to dodge.
In the end a flat percentile tax appears to work best. This generates a maximum of revenue and growth while minimizing corruption. And 10-30% appears to bound the peak of the Laffer curve.
Ben at November 9, 2015 5:41 AM
who said the money should be used instead to help existing businesses in New York
No.
If you have that much spare tax money coming in, maybe I dunno, you cut the business tax and see if that spurs organic business growth.
Otherwise you're picking winners and losers, and that shouldn't be the government's job. Because the government busy bees will pick their buddies to win, and if you're not buddies with someone in government, well it sucks to be you.
I R A Darth Aggie at November 9, 2015 6:30 AM
Once again the numerous poor pay the majority of the tax while the rich find a way to dodge.
I dunno. So far, at least on the federal level, the 1% are doing a pretty lousy job of dodging...
I R A Darth Aggie at November 9, 2015 6:35 AM
There are a number of problems with what you linked to IRA.
1. This is only the income tax. Which is only one tax people pay. It is not representative of total tax burden.
2. This is of reported income. Income that has been structured to not be taxed does not get reported and does not appear on this report. Which is related to:
3. This is of tax paid, not percentage of income. Yes, the top 50% of income tax payers pay 98% of the income tax. But that is not related to top income or percentage of income.
John Kerry has an estimated net worth of $200 million. Back in 2004 he had a net income of $5.5 million and paid only 13.4% of that in taxes. By comparison Bush had an income of $0.8 million that year and paid 27.7% of that as taxes. I agree that I would be happy to have the $800k income and pay the ~28% Bush paid. But the difference between the two shows the high variation in real taxation.
Incidentally one reason Kerry paid so little is because a large portion of his income came from tax free government bonds.
Ben at November 9, 2015 7:17 AM
I recognize that Bush and Kerry are not typical people. So let me give you another atypical example. ;)
I've had very high income volatility over my career. Over the last 10 years I've varied from $30k to $300k. And no, not always increasing. It is actually pretty random. My percentile federal tax has also varied, from 10% to 22%. But there is no relation between amount of income and percentile tax. There isn't even much of a correlation between amount of tax and amount of income. Some years I make more and I pay less dollars in taxes.
What really matters is how predictable my income is. When I know when and where things are coming from I can act to reduce my total tax burden. When things are unpredictable or unexpected I tend to pay more.
This flows over to the dataset IRA linked to. The 0.1% of tax payers are usually there only one time in their lives. This typically signifies the one time event of selling a business. The recipients are unprepared and have not correctly structured things to reduce their tax burden. Even if they sell another business they then have the experience to avoid paying that same tax level and don't end up in the 0.1%.
As an aside, if you use TurboTax don't trust the %tax number the give you. It is completely false. I don't know how they calculate it but it certainly isn't $tax paid/$income.
Ben at November 9, 2015 7:58 AM
I know how this works, and it turned out better than this indicates!
Hollywood got money, and backed Hillary for NY Senator. Those Hollywood people are SHARP!
Radwaste at November 9, 2015 9:17 AM
These are the same Hollywood scumbags that donate big bucks to the Democrats and bleat about "fairness". They want taxes for all the little people, not themselves.
David H at November 9, 2015 10:53 AM
It's a status thing. Like funding a new sports stadium for the local professional team. The politicos are hoping that having movies made there will increase people's desire to move there and bring with them economic success. "We might meet a movie star, so let's go live in Louisiana."
Thing is, the movies filmed there rarely acknowledge it in the story line. I watched a bad (really bad) monster movie on Syfy the other day. It was set in Ft. Lauderdale and filmed in Louisiana. You could tell it was filmed in Louisiana by the omnipresence of Abita Beer logos.
And like sports teams, the economic benefit is mostly imagined - often any actual benefits are wiped out by the deals made with the teams' owners.
Increased hotel tax revenues are often included in the projections of economic benefits of such deals.
Conan the Grammarian at November 9, 2015 12:15 PM
Thing is, the movies filmed there rarely acknowledge it in the story line. I watched a bad (really bad) monster movie on Syfy the other day. It was set in Ft. Lauderdale and filmed in Louisiana. You could tell it was filmed in Louisiana by the omnipresence of Abita Beer logos.
Everything's filmed in Louisiana these days because of this, but it's moving on to Georgia, since Georgia is offering a little more sugar tit. It's already happened to Vancouver and Toronto.
Louisiana tax credits are particularly horrible for taxpayers because they're fungible, meaning the filmmakers can sell tax credits for cash. Appalling.
Kevin at November 9, 2015 2:19 PM
Thing is, the movies filmed there rarely acknowledge it in the story line.
Dumb and Dumber filmed entierly in Utah. Not the eastern sea board, the mid west and Colorado
The Kingdom most famous scene was filmed less than a mile from my house, most of it within a hundred miles, not the middle east
Who really watches the credits to see where something was filmed?
lujlp at November 9, 2015 4:32 PM
I know I'm an outlier.. but I look up that stuff on IMDB all the time.
Miguelitosd at November 9, 2015 5:53 PM
Hollywood scumbags - you mean like Ronald Reagan, Charlton Heston, or Chuck Norris?
No, of course not. The reality flies in the face of the narrative.
Carry on!
Gog_Magog_Carpet_Reclaimers at November 9, 2015 8:10 PM
Really Gog? You want to claim that Hollywood is a bastion of right wing bible thumpers pushing their conservative views on America? Can you count to potato?
Ben at November 10, 2015 7:41 AM
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