Editorial: More reasons to rethink TV/movie tax credits

In just the past four years, state taxpayers have provided about $5 billion to keep and retain TV and movie productions

Categories: Editorial, Opinion

If you’re looking for ways that the state wastes our tax dollars on economic development projects that don’t nearly return the investment, you really can’t find a better example than the tax incentive program for the television and film industry.

In just the past four years, taxpayers have provided about $5 billion to keep and retain TV and movie productions in New York, or about $420 million every year for the past four years. At the end of the credits, the total expenditure is projected to top $8 billion.

That money goes to an industry that’s already making billions in profits and which very likely would do much of its business in New York — the true entertainment capital of the country — without being bribed with taxpayer dollars.

Seriously, are “Blue Bloods” and “Law & Order SVU” really going to film their gritty city court cases and crime scenes in Atlanta or Phoenix? What better place for Ben Stiller to film his limited series on the 2015 prison escape from the Clinton Correctional Facility than the actual prison itself? 

The $420 million a year being spent on the tax incentives and other credits and waivers is tax dollars that are not going to meet the needs of New Yorkers, including, for example, to fix the state’s eroding roads and bridges.

A report released last month by the nonprofit transportation research group TRIP found that 8 percent of bridges in the Capital Region, carrying 350,000 vehicles per day, were rated poor or structurally deficient. Another 57 percent were rated only fair.

We bring that up to give you something to think about while you consider the latest information on the benefits of movie tax credits.

Earlier this year, we called on state lawmakers to reconsider the credit because of its high cost. But it remains in place through 2022 after having been extended two years.

While it’s easy to criticize economic development projects for the value they return to taxpayers, or lack thereof, it’s sometimes difficult to quantify that impact in terms of value to the state, particularly the intangible benefits of being the home to the movie and TV industry. That’s how lawmakers justifying wasting so much of your money on these while elephants.

Well, a new report released Friday should give some of those legislators who’ve long supported the film tax credit something to think about — and their constituents something to complain to them about.

The Empire Center, a fiscally conservative government watchdog group, on Friday shared a multi-state study authored by a University of Southern California professor published last month that confirms what New Yorkers have suspected all along — that the state’s investment had no statistically significant impact on the industry’s employment.

Author Michael Thom, who has studied so called MPIs (Motion Picture Incentives) in the past, focused his attention on motion picture incentives in the five states that account for the bulk of such expenditures in the country — New York, Louisiana, Georgia, Connecticut and Massachusetts.

His research compared employment and wage data from before such incentives were offered and after they were offered, allowing a fair comparison between states based on the size of the industry in their respective states before and after incentives.

New York already had a healthy film and TV industry prior to the creation of the incentives, so it was easy to measure whether the money from taxpayers had any significant impact in increasing wages and data. In a nutshell, it didn’t.

Incentives in Connecticut had a large and immediate effect on employment and wages, the study found, but that’s in part due to the fact that that state had very little employment in the industry before the incentives and the industry’s presence there is comparatively very small. The impact of Louisiana’s MPI program was significant over time, the Empire Center reported, but that could be attributed to factors specifically related to that state.

For New York, the study found that the nation’s largest incentive expenditure had no significant relationship to employment and that wage gains in the industry actually dropped, the Empire Center reported.

Thom concluded in his report that “in most cases, MPI programs had no statistically significant employment impact.”

“They further reinforce the existing literature’s general conclusion that, as an economic development strategy, targeted incentive programs that carry large tax expenditures fail to encourage meaningful job creation.”

He then had a message for lawmakers in the states that make such investments: “Exercise caution before pursuing targeted economic development programs, especially those that incent creative industries.”

This report should give our state lawmakers an incentive of their own — to reconsider the film industry credit and think of ways that money could be better spent addressing the state’s real needs.

Leave a Reply