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Film Tax Breaks Draw Ire on Both Sides of the Hudson River

Film tax breaks (or movie production incentives) are an especially odious form of crony capitalism that has come under fire on both sides of the Hudson River this week.

Earlier today Bill Hammond of the New York Daily News published a disparaging piece entitled "Hollywood on the Hudson: New York gilds the silver screen with generous tax breaks," writing:

In what might be Albany's wackiest form of corporate welfare, the state heavily subsidizes movies and prime-time television shows produced in New York - to the tune of $420 million a year for the next five years.

That's a whopping $2.1 billion that could have been used to close deficits, fund schools or health care or provide tax cuts to everyone. Instead, it's adding to the already hefty profits of such media giants as Time Warner, Disney and News Corp.

This isn't about nurturing struggling artists. A lot of the handouts go to major productions with big-name stars that don't need government handouts to thrive.

Hammond later quotes Josh Barro of the Manhattan Institute, who is also critical of these programs, Barro says, “It’s no surprise these programs are a success. Congratulations, you handed out a bunch of free money and you found people to take it.” Hammond’s piece concludes:

What is clear is that New York has gotten sucked into a bidding war, with states and cities around the world competing to offer Hollywood studios the sweetest deals.

Shooting movies and TV shows is a "uniquely mobile" business, says Patricia Swinney Kaufman, chief of the state film and TV office. "Decisions are made almost daily about where another production will go," Kaufman says. "One of the most important driving factors is whether or not there will be an incentive and how that will impact the bottom line."

This is a situation that "Boardwalk Empire" chief gangster Nucky Thompson would appreciate: The government paying him to make money.

Frankly, subsidizing a great actor like Buscemi isn't so painful. But could we rethink "Gossip Girl"?

Meanwhile taxpayers in neighboring New Jersey are having a similar conversation. It all started last Wednesday when the story broke that the Garden State is awarding $420,000 in tax credits to 495 Productions for producing the inaugural season of MTV’s “Jersey Shore.” Critics have derided the tax break as the “Snooki-subsidy” in honor of a character on the show played by Nicole Polizzi. Jarrett Renshaw, Statehouse Bureau Reporter for NJ.com, reports:

Gov. Chris Christie said today he has not ruled out vetoing a controversial tax credit awarded last week to the hit MTV television show “Jersey Shore.” …

Christie spokesman Michael Drewniak said last week that the governor could not veto the actions of the Economic Development Authority because the action was “non-discretionary.”

But today, Christie said Drewniak was mistaken and that his office has yet to review the minutes of the authority meeting to determine whether a veto is warranted.

“When we get the minutes, staff will review them and make recommendations about whether to veto, and I will make the final decision, as we do with all minutes,” said Christie, who has been highly critical of the show’s representation of the Garden State and the film tax credit.

These stories aren't a surprise. Ongoing budget woes are forcing state and local governments to re-evaluate allocation of scarce taxpayer money to fund priorities like law enforcement and education. Last year, policymakers in 17 states explored curbing or eliminating their film tax break programs. For example, Washington State terminated it's film tax break program, while Michigan and New Mexico both dramatically limited their programs. 

For more on film tax breaks, see my Denver Business Journal op-ed entitled “Don’t give handouts to Hollywood,” here; and several blog posts available here and here.

Harris Kenny is Policy Analyst


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