States Grapple with Film Tax Credits as They See Low Returns

Published: March 28, 2024

States Grapple with Film Tax Credits as They See Low Returns

By Movieguide® Contributor 

While Hollywood has received a reported $25 billion in tax incentives, states such as Michigan and Georgia are debating whether those programs are hurting or helping taxpayers. 

“Frequently championed by Democrats, state tax credits for movie and TV productions are intended to juice local economies by creating jobs and boosting revenue for small businesses that provide services like catering and transportation. That, in turn, is supposed to generate more tax dollars,” Breitbart explained. 

States like New York report that for every dollar given in tax credits, they have seen returns as low as 15 to 31 cents.  

In hopes of boosting Michigan’s economy, Allen Park, a suburb of Detroit, sold $31 million in bonds to turn a former auto parts manufacturer into a movie studio, but the project failed in 2010. This left the already financially struggling city in debt, and it had to cut funding for police and firefighters.  

“The city got taken advantage of,” Sgt. Grant Peace told the New York Times. “And it hurt our pocketbooks.” 

Michigan eventually shut down the tax incentive program after auditors determined that it cost more than it was taking in. But recently, the government has been pushing to revive it. 

“We’re not on an even playing field,” Senator Dayna Polehanki said. “We’re not even in the game.” 

Polehanki is one of the lawmakers sponsoring a bill to bring Michigan back “in the game” with the 38 other states that have similar incentive programs, but her efforts haven’t been without pushback. 

“You could find almost an unlimited number of better uses for the same dollars,” said Michael Thom, a professor at the University of Southern California specializing in public finance and tax incentives. “Who on earth would say, ‘Keep giving the money to Hollywood; my kid’s school doesn’t need new books’?” 

Georgia, the state with the fastest-growing film and television industries, is also rethinking its tax incentive program. 

“In 2022 alone, the industry employed an estimated 20,000 workers in Georgia on 412 films, television shows, and music videos, spending $4.4 billion in the state. Georgia also has over 6 million square feet of film stages, second only to California,” the Atlanta Civic Circle reported. 

But despite being “The Hollywood of the South,” recent audits have reported that for every dollar spent on tax credits for film and television production, there is a 19-cent return.   

In 2022, a $900 million cap on tax credits failed to pass the Georgia legislature. A recent bill, HB 1180, passed the state’s House, where the Senate is currently reviewing the bill. The bill would not put a cap on credits given but would limit how much film and television companies can transfer, or sell, to other third parties, and would not affect local production companies that don’t transfer tax credits. 

“The credits catapulted our state to the forefront of the entertainment industry,” Rep. Clint Crowe said, but he pointed out that they have also raised the cost of state revenue and called the bill “a delicate balance between incentivizing production companies and safeguarding taxpayers’ interests.” 

Movieguide® has recently reported on why tax credits for Hollywood will have a negative impact on government and culture in the long run: 

Georgia’s tax laws and credits have been the subject of much discussion over the last few years. 

“All this political hubbub, however, overlooks a major question about the whole issue. Why are states like Georgia giving ANY tax benefits to these rich Hollywood companies anyway?” Movieguide® staff wrote in a previous op-ed. 

Movieguide® Founder and Publisher Dr. Ted Baehr said, “The unintended consequence of not redeeming Hollywood is a loss of the voting base to keep conservative and Christian ideals at the forefront of our political structure. Failure in Hollywood will without a doubt result in a devastating loss in Christian representation in the government.” Movieguide® doesn’t support schemes to create tax havens for Big Media companies in Hollywood in states like Texas or Georgia. Especially since so much of the entertainment coming from Hollywood contains so much offensive politically correct content, foul language, extreme violence, substance abuse, and explicit sex. 

“If we lose the hearts and minds of the voting base by failing to inspire and uplift the good, the true and the beautiful, we will only have ourselves to blame as well as the gross self-indulgence and arrogance of the politicians who left God behind and put themselves in the role of the savior and messiah,” Dr. Baehr added. “Without the redemption of Hollywood, the conservative politicians and parties are the walking dead.”