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Corporate Welfare

Film Tax Credits Still a Bad Idea

By Patrick Tuohey on Apr 29, 2019
Film shoot
genepphoto / Shutterstock

It is appropriate that in the St. Louis Post-Dispatch story on an effort to reinstate film tax credits, the newspaper chose a scene from the movie “Three Billboards Outside Ebbing, Missouri.” The town of Ebbing does not exist; neither do the benefits of film tax credits.

Back in 2010, Missouri’s own Tax Credit Review Commission wrote in their report that the film tax credit should be cut because it “serves too narrow of an industry and fails to provide a positive return on investment to the state.” As my colleagues wrote in 2015, “according to data gathered by the Bureau of Labor Statistics, jobs related to film production decreased during the time the film tax credit program was in place.” What has changed since then that justifies a change in policy? No one is saying.

Instead, the sponsor of the effort to offer yet another state tax credit sings paeans about the work ethic of Missourians, telling the Post-Dispatch:

If given the opportunity for a production company to select anywhere they would choose without having the tax credits being part of the equation, they would certainly choose Missouri more often than other states that don’t have the work ethic and the pride that we have as Missourians.

The characters portrayed in “Three Billboards” and the Netflix show “Ozark” aren’t the examples of work ethic for which any state would want to be known. Furthermore, wasting money on investments that fail to provide a positive return isn’t a good work ethic; it’s careless.

What’s worse, governments don’t even do a good job of picking films anyone will see. A study from the Beacon Center of Tennessee found that “using available box office data, over 40 percent of films that receive grants made less at the box office than they received in incentives.” If we want to promote a good work ethic, let’s stick with rewarding filmmakers who apply their craft well, rather than filmmakers who merely apply for handouts.

It would be laudable if supporters of this proposal argued that Missouri’s taxes are too high, and that there would be more private investment if we lowered them. Instead, they are effectively saying “taxes are too high, and we’d like to lower them for one particular industry that we favor.” That is wrong; government should not be picking winners and losers. It’s just bad policy.

 

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About the author

Patrick Tuohey

Senior Fellow of Municipal Policy

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