No More Tax Credits for Hollywood

By Stephen Slivinski

It’s like a bad re-run. A few legislators are trying to revive Arizona’s film production tax credit (SB 1170) that lapsed in 2011.

According to the last annual report on the effectiveness of the credit, in 2009 four media companies completed production on credit-approved projects. After taking into consideration the small bit of sales tax revenue the film generated while in production, the state paid out a net of just over $2 million in tax credits. That’s an average of half a million dollars per project.

How many jobs did that create? About 41 jobs directly related to the project and another 20 that were presumably from the ripple effect on the local economy. An analysis by economists at the W.P. Carey School at Arizona State University shows that these jobs were temporary and, thus, the post-production employment impact of this tax credit was “minimal.”

States like Washington and Iowa terminated their film credit programs last year and others have suspended them until their effectiveness can be studied. The general consensus among analysts is that these credits cost more than they’re worth and their existence owes more to star-struck policymakers than it does to economic logic.

The legislature this year, just as they did last year, should avoid putting Arizona taxpayers back on the hook for film production. Arizona doesn’t need to buy another ticket to this overpriced flop.

Stephen Slivinski is a Senior Economist for the Goldwater Institute.

Learn more:

Arizona Department of Commerce: Motion Picture Production Tax Incentive Annual Report for 2009 (PDF)

Tax Foundation: Report on Film Tax Credit (2011)


Comments

  1. Make costs lower through TAX REDUCTION and DEREGULATION and then subsidies are not needed.

Leave a Reply