Hollywood hits taxpayers through subsidies


On Sunday night, millions of Americans tuned into the watch the Oscars to see if their favorite Hollywood stars or films would be showered with highly coveted honors. But while most Americans are fixated on the glamour of the Oscars, Glenn Reynolds recently explained how Hollywood is robbing them blind through various tax incentives given at the state level:

About $1.5 billion in tax credits and exemptions, grants, waived fees and other financial inducements went to the film industry in 2010, according to data analyzed by the Center on Budget and Policy Priorities. Politicians like to offer this largess because they get photo-ops with celebrities, but the economic payoff is minuscule. George Mason University’s Adam Thierer has called this “a growing cronyism fiasco” and noted that the number of states involved skyrocketed to 45 in 2009 from five in 2002.

In its 2012 study “State Film Studies: Not Much Bang For Too Many Bucks,” the Center on Budget and Policy Priorities found that film-related jobs tend to go to out-of-staters who jet in, then leave. “The revenue generated by economic activity induced by film subsidies,” the study notes, “falls far short of the subsidies’ direct costs to the state. To balance its budget, the state must therefore cut spending or raise revenues elsewhere, dampening the subsidies’ positive economic impact.”

If you’ll remember, Hollywood was the beneficiary of the “fiscal cliff” deal as well, scoring $150 million per year in tax breaks. What makes this sort of corporate welfare even stranger, as Reynolds notes, are the number of actors who constantly call for higher taxes. We’re talking about an industry that reaps billions in profits each year, but yet, they’ve managed to score a hefty prize from taxpayers thanks to legislators who want their state to be the “next Hollywood.” My home state of Georgia, which plays host AMC’s The Walking Dead and has been the setting for a number of big name films, has unfortunately fallen into this trap.

The Tax Foundation, which has long been an opponent of these subsidies, has frequently explained that they don’t give taxpayers a return on their forced investment — a reality that has caused several states to abandon or curtail the practice.

The glitz and glamour of Hollywood doesn’t makeup for bad tax policy. Unfortunately, taxpayers are finding this out the hard way.

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