New Study Says Film Production Incentives Don’t Incite Economic Growth

Yesterday on the Tax Foundation’s Tax Policy Blog, Joseph Henchman discusses Michigan’s filmmaker tax credit program. He asks many of the same questions that I have raised on this blog, e.g.: Why is the state targeting the film industry and not others? Why should the state compete with other states through subsidy when it could still consume the product regardless?

He references a study that The Tax Foundation released last Thursday, “Movie Production Incentives: Blockbuster Support for Lackluster Policy,” which concluded that production incentives such as targeted tax credits do not incite economic growth.

Henchman cautions:

With Michigan so determined to pour its tax dollars into filmmakers’ pockets as the state falls apart, other states should be wary of taking them on.

I hope that Jeff City is listening!

Supporters for film productive incentives argue that they encourage employment, but I see little evidence that this is happening in Michigan. Far and away, Michigan continues to have the highest unemployment rate in the nation: 14.7 percent. (Rhode Island is the runner up, with “only” 12.7 pecent). I also want to note that, despite the fact that Michigan’s unemployment rate decreased from 15.1 percent in October, its labor force shrunk by 4,346 people during that period. This can probably be attributed partly to people giving up their job hunts or moving out of state to find work.