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Corporate Welfare / Tax Credits

Hollywood Fever Hits Missouri

By Avery Frank on Nov 21, 2022
Film set
Peter Titmuss / Shutterstock

As movie and TV production has picked up again following the pandemic, are Missourians becoming sentimental and showing symptoms of Hollywood fever?

Perhaps people are upset that the hit Netflix show Ozark and the Oscar-nominated film Three Billboards Outside Ebbing, Missouri were filmed elsewhere in the United States. Whatever the reason, some Missourians are now deliriously calling for the reinstatement of film tax credits to draw filmmakers to the Show-Me State.

Film tax credits can be summarized as state governments paying a portion (usually about 25-40%) of a filmmaker’s costs in order to attract them to do business in the state. In theory, the economic activity generated by the film production will be enough to offset the cost of taxpayer dollars, providing a positive boost to the economy.

Missouri film credit advocates have repeatedly claimed that Gone Girl made $7.9 million off a $2.36 investment. But this is simply not the case. The $7.9 million was not profit or revenue for the state, but “economic activity” (salaries, hotel rooms, dining, etc.). But even that figure is exaggerated, as most of the newly created jobs funded out-of-state employees and all in-state workers were part-time (most work as extras). Out-of-state production companies like to retain their own workers; the number of Missouri editors, producers, actors, and directors actually declined over the Missouri film-credit era.

Additionally, opportunity cost cannot be ignored. Opportunity cost can be defined as the loss of benefits (time, enjoyment, profit) that could have been received from an alternative strategy. Therefore, when you read articles promoting economic tax credits, you shouldn’t compare supposed “boosts” in economic activity to $0, but to what the same millions of dollars could have produced instead, such as infrastructure, public safety, or tax rebates for Missouri citizens.

Film tax credits will not provide Missouri or its citizens with gains in the long run. Independent studies find that states typically recapture only 8 to 28 cents per dollar spent on film credits. Missouri terminated the film credit program partly due to its economic failures, as the Missouri Department of Economic Development found that the program allowed the government to recapture only 15 cents per dollar spent.

Be careful about the spread of Hollywood fever. Instead of paying for films to come to our state, why don’t we improve our state with those funds so filmmakers will have more reasons to come? That would make our state more attractive for all businesses and citizens, not just Hollywood accountants.

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About the author

Avery Frank

Research Assistant

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