EDITORIAL: Lights, camera … and open your wallets
An 11th-hour effort last year in Carson City to greatly expand state tax breaks for the movie business died without a vote, but proponents of the handouts haven’t given up. At a UNLV forum last week, local film industry experts touted the proposal — for up to $5 billion in credits — as a viable economic development tool.
“Now is the time,” TV producer Jay Torres (“Mr. Mom,” “Alias”) said at the event hosted by UNLV’s Center for Business and Economic Research. “The industry would explode here at a rate that I don’t think anyone can imagine if the tax incentives are put in place.”
There’s nothing wrong with streamlining red tape or making other modest accommodations to attract film and TV projects. But Las Vegas and its unique backdrop have successfully lured movies and TV productions for decades without special taxpayer dispensation.
Coincidentally, the panel discussion came just weeks after the release of an audit on Georgia’s generous film and TV tax credit program, often hailed by supporters as a success story to be replicated. The review found that the state tax breaks created about half the jobs promised and returned just 19 cents on the dollar, Variety reported in December.
“Consistent with studies of other state film tax incentives programs,” the audit found, “the state of Georgia loses money.”
Indeed, a 2022 review by the National Conference of State Legislatures of other states found a recurring theme. In California, the costs of film credits “exceeded the benefits,” according to the state’s legislative analysts office. In Pennsylvania, an audit determined that “the net return on investment is 13.1 cents of state tax revenue for each tax credit dollar.” And a Virginia review of that state’s program concluded it has a “a negligible benefit to the Virginia economy, and provides a negligible return on the state’s investment.”
A 2016 USC examination of film tax incentive programs across the country piles on. “The incentives are a bad investment,” lead author Michael Thom, an assistant professor at the USC Price School of Public Policy, told USC Today. “States pour millions of tax dollars into a program that offers little return.”
It’s notable that, as of 2020, 13 states had decided to eliminate such programs, while many others had scaled back on the practice, which usually involves “transferrable” credits that end up being sold and cashed in by other industries.
It’s not surprising that participants in the UNLV forum would overlook these less-than-glowing assessments. But when star-struck Democrats resurrect this issue at the 2024 Legislature, they’ll need answers for some inconvenient questions about the economic value of film and TV tax credits.