Like a horror film bogeyman, legislation creating film tax credits is back! Both HB2027 and HB1767 attempt to set up tax credits to benefit people who make films in Missouri. The bills are not identical in their language, but both vie for the name “Show Missouri Film and Digital Media Act."
Film tax credits are a bad idea for Missouri, as my colleagues and I have written previously. The Missouri legislature itself condemned them in 2010, saying the credit serves, “too narrow of an industry and fails to provide a positive return on investment to the state.” A study of film tax credits in Tennessee found “over 40 percent of films that receive grants made less at the box office than they received in incentives.”
Now we have a report from the state auditor of Georgia—the place supporters of film tax credits here in Missouri hold up as a model—and it isn’t good. According to The Atlanta Journal-Constitution, the report states: “The economic benefits of Georgia’s popular and lucrative film tax credit have been greatly inflated, a new audit says, and past estimates have not considered what would have happened if the state had instead spent the money on things such as education or health care.”
The just-released report from the Georgia Department of Audits and Accounts is more specific:
The economic activity generated by the film tax credit does not generate sufficient additional revenue to offset the credit, even after considering tourism and studio construction. In 2016, the film tax credit resulted in a net revenue loss to the state estimated at $602 million. The state’s return on investment for the credit was 10 cents for each dollar, though local governments received an additional return of 11 cents in revenue.
No serious legislator interested in protecting tax funds or reducing waste and fraud ought to consider reinstating film tax credits in Missouri.