Don’t Get Too Excited about Film Tax Subsidies

The City Council of Kansas City, Missouri, recently passed an ordinance establishing Kansas City’s first film development program. This program will provide up to $75,000 per fiscal year in tax rebates for film-makers that produce films in Kansas City.

While $75,000 may not seem like too imposing a number in terms of the city’s $1.53 billion planned budget for the 2016-2017 fiscal year, it illustrates the misguided focus the leaders of Kansas City have in allocating taxpayer money. In making this investment, the City is missing out on the opportunity to meaningfully invest this $75,000 of taxpayer money into other projects that have clear and constructive benefits and a return on investment. Films do not.

The Show-Me Institute has repeatedly documented the failings of film tax credits in Missouri, most recently in testimony against HB 803, a proposal to reinstate Missouri’s film tax credit program (which expired without renewal in November of 2013) (here), and on the local film tax subsidy experiment that was Gone Girl (here and here). Long story short, movies almost never live up to their promises when it comes to jobs, tax revenue, or long-term economic development.

But it’s not just us. In 2010 and 2012, the Missouri Tax Credit Review Commission called for the state’s film tax credit to be eliminated because they repeatedly found that it was promoting neither long-term economic development nor even simple return on the state’s investment.

In fact, as of 2016, thirteen states (including both Missouri and Kansas)  have recognized that film tax subsidies are not high-yielding, profitable ventures in terms of providing long-term sustainable jobs, increased economic development, or a return on investment (many studies have found these state programs generate less than 30 cents for every $1 spent), and have thus decided to not have statewide film tax incentives.

Past experience shows quite clearly that film subsidies do not work and are not a prudent investment. Instead of chasing after the next Gone Girl, the city should pursue programs that are practical for economic and social development, like good schools, safe streets, and functioning infrastructure.