For some reason, film tax credits remain popular in Jefferson City. They are much less popular with economists.

Missouri lawmakers are once again debating whether to extend the state’s film tax credit program. Earlier this month, I testified against legislation that would continue the subsidy. For those who don’t remember, this is a debate the state has already had.

Missouri operated a film tax credit program before ending it more than a decade ago. In 2010, the state’s Tax Credit Review Commission examined the program and concluded it served too narrow an industry to justify its cost to taxpayers. Lawmakers shut it down soon after. The idea never fully disappeared, though, and in 2023 the subsidy returned, this time with the promise of better results. The current program allows up to $16 million per year in credits for film and television productions.

So far, there is little evidence that anything has changed. Supporters point to production spending as proof that the program works. The Missouri Film Office reports that productions spent more than $40 million in the state in 2025 while receiving roughly $15.7 million in credits. But production spending is not the same as fiscal return. Much of that activity consists of temporary wages, lodging, equipment rentals, and other short-term expenses tied to a shoot. When filming ends, much of that spending leaves with it. What matters for taxpayers is how much tax revenue actually makes its way back to the state.

On that measure, film subsidies perform poorly almost everywhere they have been tried. Research summarized by the Tax Foundation estimates governments recapture between eight and twenty-eight cents in new tax revenue for every dollar of credit issued. Even Georgia, often cited as the model for film incentives, struggles to demonstrate that the program pays for itself. A 2020 performance audit by the Georgia Department of Audits and Accounts found that tax revenue generated by film production activity fell well short of the credits the state awarded.

There is also a basic budget reality lawmakers should keep in mind. Film tax credits are sometimes treated as something different than spending because the state only grants them after a production films in Missouri. But the fiscal effect is the same. Each credit issued is a commitment to collect less revenue in the future.

Meanwhile, the productions most closely associated with Missouri often film somewhere else entirely. A new HBO series set in St. Louis, DTF St. Louis, was filmed in Georgia. The Netflix series Ozark, which was set at Missouri’s Lake of the Ozarks, was also largely filmed in Georgia.

Though it should go without saying, Missouri’s lawmakers should be focused on using state tax dollars as effectively as possible. And there’s no disputing that film tax credits have repeatedly failed that test. Extending the credit today would mean ignoring the state’s past experience and choosing to repeat it.

The post Missouri’s Film Tax Credits Still Don’t Add Up appeared first on Show-Me Institute.

TO THE HONORABLE MEMBERS OF THE COMMITTEE

Thank you for the opportunity to testify. My name is Elias Tsapelas, and I’m the Director of State Budget and Fiscal Policy at the Show-Me Institute, a nonprofit, nonpartisan, Missouri-based think tank that advances sensible, well-researched, free-market solutions to state and local policy issues. The ideas presented here are my own and are offered in consideration of proposals that will affect tax credits in Missouri.

Senate Bill 1079 consolidates Missouri’s existing film and series production tax credit sub-caps into a single $16 million pool for both, leaving the state’s total commitment the same. The only substantive effect of the bill would be to give the Film Office more flexibility in how the same dollars are allocated. That flexibility does not address the fundamental problem with this program.

Current and Past Tax Credit Failures

Despite the Missouri film tax credit’s recent revival, our state has a long history with this troubling incentive. Until its sunset in 2013, Missouri’s previous iteration made promises similar to what supporters are touting today. Missouri’s own Tax Credit Review Commission recommended the credit be eliminated because it served too narrow an industry and failed to provide a positive return on investment.¹

Research confirms that pattern holds nationally. Film tax credits have not resulted in job growth, have not affected market share or industry output, and have produced only short-term wage gains for those already in the industry.² Credits in many states generated just cents on the dollar. As one Tax Foundation analyst notes, “non-favored activities and businesses remain on the hook to bear the full impact of the state’s tax code.”³

The Missouri Film Office has pointed to the number of projects approved and production spending in the state as evidence the program is working, but that is not the right measure for determining whether the program is a good investment for state taxpayers.⁴ The relevant question is how much the state receives back in tax revenue and broader economic activity—and by that measure, the research is consistent: film tax credits do not generate a positive return.

The Competitiveness Argument Doesn’t Hold

Supporters of SB 1079 argue that pooling the sub-caps will make Missouri more competitive for productions. Even setting aside the ROI question, that argument doesn’t hold.

Steven Conrad, the showrunner who created a new HBO series set in St. Louis and filmed it entirely in Atlanta, recently suggested that governments may not be well-served by chasing the film industry at all.⁵ His observation reflects a structural reality: Georgia has spent two decades building the studios, crews, soundstages, and production infrastructure that make large productions possible. Missouri has not. No reallocation of $16 million changes that.

Georgia’s own state auditor found that even Georgia’s fully developed, deeply established program returned just 10 cents to the state for every dollar of credit granted, producing a net revenue loss of $602 million in a single year.⁶ If one of the most mature film-incentive programs in the country cannot generate a positive return on investment, a program at a fraction of its scale operating in a state without comparable infrastructure has no prospect of doing so.

Targeted Credits Are Poor Economic Policy

Targeted economic development tax credits are just another way for lawmakers to pick winners and losers, a job that is better left to consumers in the market. When tax breaks are given to some, other taxpayers have to make up for the lost revenue. The impulse to do something to support an industry is understandable, but tax credits are a poor substitute for the conditions that make industries thrive organically. A dollar of film tax credits reduces state revenue by exactly the same amount as a dollar of direct appropriations—the difference is that credits bypass the appropriations process and receive less scrutiny.

Prioritize Tax Relief That Benefits All Missourians

Missouri is already a national leader in state spending in the name of economic development. Over the past few decades, Missouri has forgone billions in state tax revenue in favor of a host of narrow incentives that have consistently shown poor results. In FY2025 alone, Missouri redeemed more than $961 million in tax credits—nearly double the $521 million redeemed in 2010.⁷ The General Assembly is simultaneously weighing whether to eliminate the state income tax, a reform that would deliver broad economic benefits to every Missourian. The legislature should consider whether a growing tax credit portfolio is consistent with that goal. Expanding targeted credits that erode the income-tax base works against broad-based tax relief, and Missouri would be better served by pursuing the latter.

The film tax credit is a small program, but it exemplifies the approach to tax policy that makes comprehensive reform harder to achieve. Tax credit programs have not been successful in Missouri in the past, there is little evidence to suggest the film tax credit is succeeding now, and there is no reason to believe this program will perform differently under a restructured allocation. If increasing economic opportunity is the goal, the research is clear: Instead trying to manufacture more opportunities at the expense of taxpayers, lawmakers should provide broad-based tax relief to every Missourian.

NOTES

1. “Report of the Missouri Tax Credit Review Commission.” Missouri Tax Credit Review Commission. 2010; https://www.semissourian.com/files/tcrcfinalreport113010.pdf.
2. “Lights, camera and no action: How state film subsidies fail.” USC Press Release. August 18, 2016; https://pressroom.usc.edu/lights-camera-and-no-action-how-state-film-subsidies-fail.
3. Loughead, Katherine. “Illuminating the Hidden Costs of State Tax Incentives.” Tax Foundation. 2021; https://taxfoundation.org/state-tax-incentives-costs.
4. “Made-in-Missouri Film and TV Productions Spent $40.7 Million in 2025.” Missouri Department of Economic Development. February 2026; https://ded.mo.gov/press-room/made-missouri-film-and-tv-productions-spent-407-million-2025.
5. Neman, Daniel. “HBO’s DTF St. Louis has a dream cast, but it wasn’t shot here.” St. Louis Post-Dispatch. February 26, 2026; https://www.stltoday.com/life-entertainment/local/movies-tv/article_cfa2d34c-435a-40fd-9fa5-75933d716915.html.
6. “Impact of the Georgia Film Tax Credit.” Georgia Department of Audits and Accounts, Performance Audit Division. Report No. 18-03B. January 2020; https://www.audits.ga.gov/ReportSearch/download/23536.
7. “Fourth Quarter Tax Credit Report, Fiscal Year 2025.” Missouri Department of Revenue. 2025; https://dor.mo.gov/public-reports/documents/Fourth-Quarter-FY25-Tax-Credit-Report.pdf.

The post Senate Bill 1079: Film Tax Credits appeared first on Show-Me Institute.

TO THE HONORABLE MEMBERS OF THE COMMITTEE

Thank you for the opportunity to testify. My name is Elias Tsapelas, and I’m the Director of State Budget and Fiscal Policy at the Show-Me Institute, a nonprofit, nonpartisan, Missouri-based think tank that advances sensible, well-researched, free-market solutions to state and local policy issues. The ideas presented here are my own and are offered in consideration of proposals that will affect tax credits in Missouri.

House Bill 2142 consolidates Missouri’s existing film and series production tax credit sub-caps into a single $16 million pool for both, leaving the state’s total commitment the same. The only substantive effect of the bill would be to give the Film Office more flexibility in how the same dollars are allocated. That flexibility does not address the fundamental problem with this program.

Current and Past Tax Credit Failures

Despite the Missouri film tax credit’s recent revival, our state has a long history with this troubling incentive. Until its sunset in 2013, Missouri’s previous iteration made promises similar to what supporters are touting today. Missouri’s own Tax Credit Review Commission recommended the credit be eliminated because it served too narrow an industry and failed to provide a positive return on investment.¹

Research confirms that pattern holds nationally. Film tax credits have not resulted in job growth, have not affected market share or industry output, and have produced only short-term wage gains for those already in the industry.² Credits in many states generated just cents on the dollar. As one Tax Foundation analyst notes, “non-favored activities and businesses remain on the hook to bear the full impact of the state’s tax code.”³

The Missouri Film Office has pointed to the number of projects approved and production spending in the state as evidence the program is working, but that is not the right measure for determining whether the program is a good investment for state taxpayers.⁴ The relevant question is how much the state receives back in tax revenue and broader economic activity—and by that measure, the research is consistent: film tax credits do not generate a positive return.

The Competitiveness Argument Doesn’t Hold

Supporters of HB 2142 argue that pooling the sub-caps will make Missouri more competitive for productions. Even setting aside the ROI question, that argument doesn’t hold.

Steven Conrad, the showrunner who created a new HBO series set in St. Louis and filmed it entirely in Atlanta, recently suggested that governments may not be well-served by chasing the film industry at all.⁵ His observation reflects a structural reality: Georgia has spent two decades building the studios, crews, soundstages, and production infrastructure that make large productions possible. Missouri has not. No reallocation of $16 million changes that.

Georgia’s own state auditor found that even Georgia’s fully developed, deeply established program returned just 10 cents to the state for every dollar of credit granted, producing a net revenue loss of $602 million in a single year.⁶ If one of the most mature film-incentive programs in the country cannot generate a positive return on investment, a program at a fraction of its scale operating in a state without comparable infrastructure has no prospect of doing so.

Targeted Credits Are Poor Economic Policy

Targeted economic development tax credits are just another way for lawmakers to pick winners and losers, a job that is better left to consumers in the market. When tax breaks are given to some, other taxpayers have to make up for the lost revenue. The impulse to do something to support an industry is understandable, but tax credits are a poor substitute for the conditions that make industries thrive organically. A dollar of film tax credits reduces state revenue by exactly the same amount as a dollar of direct appropriations—the difference is that credits bypass the appropriations process and receive less scrutiny.

Prioritize Tax Relief That Benefits All Missourians

Missouri is already a national leader in state spending in the name of economic development. Over the past few decades, Missouri has forgone billions in state tax revenue in favor of a host of narrow incentives that have consistently shown poor results. In FY2025 alone, Missouri redeemed more than $961 million in tax credits—nearly double the $521 million redeemed in 2010.⁷ The General Assembly is simultaneously weighing whether to eliminate the state income tax, a reform that would deliver broad economic benefits to every Missourian. The legislature should consider whether a growing tax credit portfolio is consistent with that goal. Expanding targeted credits that erode the income-tax base works against broad-based tax relief, and Missouri would be better served by pursuing the latter.

The film tax credit is a small program, but it exemplifies the approach to tax policy that makes comprehensive reform harder to achieve. Tax credit programs have not been successful in Missouri in the past, there is little evidence to suggest the film tax credit is succeeding now, and there is no reason to believe this program will perform differently under a restructured allocation. If increasing economic opportunity is the goal, the research is clear: Instead trying to manufacture more opportunities at the expense of taxpayers, lawmakers should provide broad-based tax relief to every Missourian.

NOTES

1. “Report of the Missouri Tax Credit Review Commission.” Missouri Tax Credit Review Commission. 2010; https://www.semissourian.com/files/tcrcfinalreport113010.pdf.
2. “Lights, camera and no action: How state film subsidies fail.” USC Press Release. August 18, 2016; https://pressroom.usc.edu/lights-camera-and-no-action-how-state-film-subsidies-fail.
3. Loughead, Katherine. “Illuminating the Hidden Costs of State Tax Incentives.” Tax Foundation. 2021; https://taxfoundation.org/state-tax-incentives-costs.
4. “Made-in-Missouri Film and TV Productions Spent $40.7 Million in 2025.” Missouri Department of Economic Development. February 2026; https://ded.mo.gov/press-room/made-missouri-film-and-tv-productions-spent-407-million-2025.
5. Neman, Daniel. “HBO’s DTF St. Louis has a dream cast, but it wasn’t shot here.” St. Louis Post-Dispatch. February 26, 2026; https://www.stltoday.com/life-entertainment/local/movies-tv/article_cfa2d34c-435a-40fd-9fa5-75933d716915.html.
6. “Impact of the Georgia Film Tax Credit.” Georgia Department of Audits and Accounts, Performance Audit Division. Report No. 18-03B. January 2020; https://www.audits.ga.gov/ReportSearch/download/23536.
7. “Fourth Quarter Tax Credit Report, Fiscal Year 2025.” Missouri Department of Revenue. 2025; https://dor.mo.gov/public-reports/documents/Fourth-Quarter-FY25-Tax-Credit-Report.pdf.

The post House Bill 2142: Film Tax Credits appeared first on Show-Me Institute.

TO THE HONORABLE MEMBERS OF THE COMMITTEE

Thank you for the opportunity to testify. My name is Elias Tsapelas, and I’m the Director of State Budget and Fiscal Policy at the Show-Me Institute, a nonprofit, nonpartisan, Missouri-based think tank that advances sensible, well-researched, free-market solutions to state and local policy issues. The ideas presented here are my own and are offered in consideration of proposals that will affect tax credits in Missouri.

House Bill 2058 consolidates Missouri’s existing film and series production tax credit sub-caps into a single $16 million pool for both, leaving the state’s total commitment the same. The only substantive effect of the bill would be to give the Film Office more flexibility in how the same dollars are allocated. That flexibility does not address the fundamental problem with this program.

Current and Past Tax Credit Failures

Despite the Missouri film tax credit’s recent revival, our state has a long history with this troubling incentive. Until its sunset in 2013, Missouri’s previous iteration made promises similar to what supporters are touting today. Missouri’s own Tax Credit Review Commission recommended the credit be eliminated because it served too narrow an industry and failed to provide a positive return on investment.¹

Research confirms that pattern holds nationally. Film tax credits have not resulted in job growth, have not affected market share or industry output, and have produced only short-term wage gains for those already in the industry.² Credits in many states generated just cents on the dollar. As one Tax Foundation analyst notes, “non-favored activities and businesses remain on the hook to bear the full impact of the state’s tax code.”³

The Missouri Film Office has pointed to the number of projects approved and production spending in the state as evidence the program is working, but that is not the right measure for determining whether the program is a good investment for state taxpayers.⁴ The relevant question is how much the state receives back in tax revenue and broader economic activity—and by that measure, the research is consistent: film tax credits do not generate a positive return.

The Competitiveness Argument Doesn’t Hold

Supporters of HB 2058 argue that pooling the sub-caps will make Missouri more competitive for productions. Even setting aside the ROI question, that argument doesn’t hold.

Steven Conrad, the showrunner who created a new HBO series set in St. Louis and filmed it entirely in Atlanta, recently suggested that governments may not be well-served by chasing the film industry at all.⁵ His observation reflects a structural reality: Georgia has spent two decades building the studios, crews, soundstages, and production infrastructure that make large productions possible. Missouri has not. No reallocation of $16 million changes that.

Georgia’s own state auditor found that even Georgia’s fully developed, deeply established program returned just 10 cents to the state for every dollar of credit granted, producing a net revenue loss of $602 million in a single year.⁶ If one of the most mature film-incentive programs in the country cannot generate a positive return on investment, a program at a fraction of its scale operating in a state without comparable infrastructure has no prospect of doing so.

Targeted Credits Are Poor Economic Policy

Targeted economic development tax credits are just another way for lawmakers to pick winners and losers, a job that is better left to consumers in the market. When tax breaks are given to some, other taxpayers have to make up for the lost revenue. The impulse to do something to support an industry is understandable, but tax credits are a poor substitute for the conditions that make industries thrive organically. A dollar of film tax credits reduces state revenue by exactly the same amount as a dollar of direct appropriations—the difference is that credits bypass the appropriations process and receive less scrutiny.

Prioritize Tax Relief That Benefits All Missourians

Missouri is already a national leader in state spending in the name of economic development. Over the past few decades, Missouri has forgone billions in state tax revenue in favor of a host of narrow incentives that have consistently shown poor results. In FY2025 alone, Missouri redeemed more than $961 million in tax credits—nearly double the $521 million redeemed in 2010.⁷ The General Assembly is simultaneously weighing whether to eliminate the state income tax, a reform that would deliver broad economic benefits to every Missourian. The legislature should consider whether a growing tax credit portfolio is consistent with that goal. Expanding targeted credits that erode the income-tax base works against broad-based tax relief, and Missouri would be better served by pursuing the latter.

The film tax credit is a small program, but it exemplifies the approach to tax policy that makes comprehensive reform harder to achieve. Tax credit programs have not been successful in Missouri in the past, there is little evidence to suggest the film tax credit is succeeding now, and there is no reason to believe this program will perform differently under a restructured allocation. If increasing economic opportunity is the goal, the research is clear: Instead trying to manufacture more opportunities at the expense of taxpayers, lawmakers should provide broad-based tax relief to every Missourian.

NOTES

1. “Report of the Missouri Tax Credit Review Commission.” Missouri Tax Credit Review Commission. 2010; https://www.semissourian.com/files/tcrcfinalreport113010.pdf.
2. “Lights, camera and no action: How state film subsidies fail.” USC Press Release. August 18, 2016; https://pressroom.usc.edu/lights-camera-and-no-action-how-state-film-subsidies-fail.
3. Loughead, Katherine. “Illuminating the Hidden Costs of State Tax Incentives.” Tax Foundation. 2021; https://taxfoundation.org/state-tax-incentives-costs.
4. “Made-in-Missouri Film and TV Productions Spent $40.7 Million in 2025.” Missouri Department of Economic Development. February 2026; https://ded.mo.gov/press-room/made-missouri-film-and-tv-productions-spent-407-million-2025.
5. Neman, Daniel. “HBO’s DTF St. Louis has a dream cast, but it wasn’t shot here.” St. Louis Post-Dispatch. February 26, 2026; https://www.stltoday.com/life-entertainment/local/movies-tv/article_cfa2d34c-435a-40fd-9fa5-75933d716915.html.
6. “Impact of the Georgia Film Tax Credit.” Georgia Department of Audits and Accounts, Performance Audit Division. Report No. 18-03B. January 2020; https://www.audits.ga.gov/ReportSearch/download/23536.
7. “Fourth Quarter Tax Credit Report, Fiscal Year 2025.” Missouri Department of Revenue. 2025; https://dor.mo.gov/public-reports/documents/Fourth-Quarter-FY25-Tax-Credit-Report.pdf.

The post House Bill 2058: Film Tax Credits appeared first on Show-Me Institute.

Missouri’s economy has lagged much of country over the past decade. And for more than twenty years, Missouri has been a national leader in awarding tax credits for private gain in the name of “economic development.” If issuing tax credits were a good way to spur growth, our state would have one of the fastest-growing economies in the country. But it’s not, so we don’t.

Unfortunately, despite years of evidence that economic development tax credits don’t work, state policymakers appear to be doubling down on this wrongheaded approach. After more than a decade dormant, Missouri’s film tax credit is on the path to returning. The Senate approved a bill rebooting the program, and a House committee recently voted out a separate measure including the credit. All of this for a program that was so bad our elected officials got rid of it in 2013.

Countless reports, studies, and audits reached the same conclusion: the program is a horrible investment. It serves too narrow of an industry to help grow a state’s economy. Much of the credit’s benefit goes to out-of-state companies and workers. And further, the tax credits do not generate sufficient tax revenues to justify the subsidy. While it is true that many other states currently offer some form of film subsidy, that is not an excuse for Missouri to rejoin this race to the bottom.

As we enter the second half of this year’s legislative session, there’s still time for our elected officials to reverse course. It’s understandable that policymakers would be interested in finding policies that would help get Missouri’s economy back on the right track, but government picking winners and losers isn’t the way to do that.

In fact, turning around Missouri’s economy doesn’t have to be as difficult as our elected officials are making it seem. If taxes are too high for the film industry to consider Missouri, instead of subsidizing Hollywood, policymakers should focus on lowering the tax burden for all Missourians. At the very least, our elected officials need to stop advancing policies that we already know don’t work. Bringing back the film tax credit is not just a bad idea—it’s an insane one.

The post Tax Credit Insanity appeared first on Show-Me Institute.

The post Money for Movies, Funding Education in 2023, and Pot Taxes appeared first on Show-Me Institute.

The post Film and Entertainment Industry Tax Credits appeared first on Show-Me Institute.

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.

The post Hollywood Fever Hits Missouri appeared first on Show-Me Institute.

The post Senate Bill 732 and Film Tax Credits appeared first on Show-Me Institute.

The state’s film tax credit program was intended to stimulate the film industry by reducing a studio’s tax liability. Thankfully,  the film tax credit program sunset in 2013. The program was a failure. The Tax Credit Review Commission recommended that the tax credit be eliminated because it served too narrow of an industry and didn’t provide a positive return on investment. There was very little evidence that the program delivered on any of its promises. Do we really think the music production tax credit will produce a different result under very similar circumstances?

Show-Me Institute writers have been arguing against the film tax credit program for years (this tax credit program continues to haunt the legislature). What was said about that program also rings true for a potential music production tax program: If this industry cannot succeed in Missouri without government assistance, then maybe it shouldn’t be here.

Missouri certainly wasn’t the next Hollywood, but perhaps there’s potential for us to be the country’s next music capital. But that isn’t for the government to decide. If a private company wants to make it happen, great! Lawmakers, on the other hand, should not be giving out incentives (on the backs of other taxpayers) to artificially boost music production companies. It didn’t work with film tax credits—why should we expect a music production tax credit to be any different?

The post Call for Music Production Tax Credits Sounds Familiar appeared first on Show-Me Institute.

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.

The post They’re Back! Film Tax Credits Haunt the Missouri Legislature appeared first on Show-Me Institute.

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.

The post Film Tax Credits Still a Bad Idea appeared first on Show-Me Institute.

The Post-Dispatch mentioned that many other states have also ended their film tax credit programs due to low returns on the investment. But the Post did manage to find one advocate in Kansas City:

Steph Scupham, director of the Kansas City Film Office, said the benefits of landing a project outweigh the costs.

“I don’t know what’s wrong with people coming in, doing business, spending money and leaving,” she said, “especially when it also educates the people in our industry and gives our industry that is here more experience.”

Indeed, nothing is wrong with “people coming in, doing business, spending money and leaving.” What is wrong is taking precious tax dollars intended to support basic services like police and schools and giving them to private film companies. Not only is it wrong, it doesn’t work.

A recent 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.” That is a stunningly bad track record. Missouri’s own Tax Credit Review Commission wrote in their 2010 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.”

My colleague Patrick Ishmael wrote exactly one year ago that to the degree Georgia is underwriting a piece about the Ozarks, Missouri is coming out ahead. Thankfully, the Post-Dispatch makes clear there is no danger of reinstating such a film tax credit regime statewide. Kansas City ought to scrap its effort, too.

The post Film Tax Credits: Facts and Fiction appeared first on Show-Me Institute.

Since news articles reporting on the hearing only highlighted the arguments of those in support of HB 803, I’ll reiterate what analysts at the Show-Me Institute have written so many times before: Film tax credits are bad public policy!

Supporters of the program argue that the film tax credits bring immense economic benefits to the state. However, the problem with this argument is that it doesn’t look at the costs of the program along with its benefits. While supporters spout claims that “Gone Girl brought in $7 million into the economy,” the reality is the program’s return on investment (tax dollars generated versus tax dollars spent) is merely cents on the dollar. In other words, the program does not pay for itself.

Furthermore, the argument that the film tax credit helps create permanent jobs is a fallacy. Film production jobs, by their very nature, are short-lived. To add insult to injury, the highest paying jobs often go to non-Missouri residents, since production jobs require specific and highly skilled professionals. However, perhaps the most shocking fact is that Missouri has had a film tax credit program since 1999, and yet, 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.

It is bewildering that lawmakers can ignore important economic indicators, and the advice of the state’s own Tax Credit Review Commission, just so Missouri can play hostess to Hollywood for a few weeks. I hope legislators and political spectators will take a look at our testimony and exercise some common sense.

The post Touted Benefits of the Film Tax Credit Program Are Misleading appeared first on Show-Me Institute.

Read the full testimony:

The post On Film Tax Credits appeared first on Show-Me Institute.

However, we should not be over-eager in offering handouts to Hollywood. Other than pride, we get little in return. As we have written before, the film tax credit has been ineffective in spurring economic development and leaves Missouri taxpayers to pick up the bill for mega-million-dollar moguls.

The intent of the film tax credit program is to provide initial seed money in an effort to create a sustainable film industry. Yet, despite the fact that Missouri offered a film tax credit for nearly 15 years, the state never became a major hub for film production. In light of this, Missouri’s own Tax Credit Review Commission wrote in their 2010 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.”

The failure of this program comes from the nature of Hollywood productions. Since nearly 40 states offer similar programs, Hollywood studios can simply wait and see which state will offer the most money for their production. With scarce resources and tight budget constraints, Missouri should not go head to head with states like New York and California on who can hand out more wasteful tax credits.

The success of Gone Girl should not overshadow the fact that the film tax credit program is bad policy for Missouri. If lawmakers are truly determined to bring more economic development to the state, then they should lower taxes for all businesses instead of offering handouts to billion-dollar industries.

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Last fall, when Gone Girl began production, Cape Girardeau descended into a starstruck madness. All talk focused around the movie and the stars; Facebook and Instagram became flooded with celebrity sightings. I don’t blame locals for their enthusiasm of hosting a movie star like Ben Affleck and being the center of a major film production, but I do think it is more than a little ridiculous that Missouri taxpayers will be stuck with a $2.36 million tax bill to pay for this fleeting moment in the presence of Hollywood stars.

Taking advantage of the Department of Economic Development’s (DED) Film Tax Credit program before it expired in November 2013, the producers of Gone Girl received $2.36 million in tax credits from the state to offset the cost of production and taxes on income and payroll. Tax credits are dollar-for-dollar reductions in a tax filer’s tax liability, meaning that every dollar of “credit” given by the state for projects like Gone Girl ultimately results in a dollar less in revenue to the state, which could pay for schools and other taxpayer needs.

Don’t be fooled by reports that these credits pay for themselves. The truth about film tax credits is that they bleed taxpayers to subsidize an industry that last year brought in $36 billion in revenue worldwide.

Take, for example, the $3,262 in DirectTV charges for the installation of satellite TV in the hotel rooms of Affleck, director David Fincher, and other highly paid Hollywood producers. Or try the subsidization of a movie star’s hotel room. Then there is the $70 massage Rosamund Pike received courtesy of taxpayer dollars. And, my personal favorite, $650 for an espresso maker for the cast and crew. Agreeing to these tax credits means taxpayers end up paying for outlandish expenditures that benefit Hollywood rather than Missourians.

Despite the ridiculous expenditures subsidized with taxpayer dollars, tax credits still don’t meet the basic tenets of their purpose. Take the promise of job creation for example. At the price of $2.36 million, each of the 116 Missourians hired for the production of Gone Girl should have a job that pays $20,344 for an entire year. Looking at the payroll of the production, none of these reported job positions were full-time or high-paying, and not a single Missourian is still employed in the same capacity. Furthermore, a closer look at their payroll reveals that many of the “jobs” created by the film went to out-of-state employees, businesses, and contractors—not Missourians.

Why doesn’t this tax credit work? Because Missouri does not have the proper infrastructure to support film production. Missouri has to compete with the 40 other states that have similar programs, but with much higher tax incentives. When faced with competition from states like New York and Louisiana who have hundreds of millions of dollars in film tax credits, Missouri can’t afford to compete in this race to the bottom.

Having lived in Southeast Missouri for the majority of my life, I can understand the thrill that the production of Gone Girl brought to the area. But the ugly truth is that these film tax credits don’t provide the jobs and economic growth that Cape Girardeau and Missouri need. Let’s leave Hollywood in California so that Missourians don’t have to finance celebrities’ espressos or massages and focus on attracting businesses and investors to Missouri that won’t leave taxpayers to foot the bill.

Jessica Stearns is an intern at the Show-Me Institute.

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Sure, Winter’s Bone received $260,000 under Missouri’s film tax credit program. And the film did receive great reviews. But the state actually paid more to the film More Than Puppy Love 2, the (apparent) sequel to More Than Puppy Love, a 2002 film that IMDB users panned. One wrote that “This just might be the worst movie ever made.”

I do not know what reviewers said about More Than Puppy Love 2, because I could not find any references to it. But I do know that state taxpayers paid more than $285,000 to have that movie made here in Missouri. I wonder if the puppy used in the film was counted as one of the “jobs” associated with the production of More Than Puppy Love 2. There have been more dubious job claims made when justifying film tax credits.

If you love film, or anything else creative, the last thing you should want is for it to receive taxpayer funding. Some of the best works of art, films, and books are controversial — as they should be. Censorship and the funding of saccharine works begins when taxpayer dollars allow politicians and bureaucrats to get involved in deciding what is, and what is not, art.

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But the problem, Lynch says, is the lack of financial incentives available for movie production in Missouri. Though the state still offers the film production tax credit, Missouri Gov. Jay Nixon shut down the Missouri Film Commission in 2011, and the Missouri Accountability Portal shows that no film tax credits have been issued for 2012.

From KSDK:

Missouri actually has $4.5 million to use for tax breaks, but the Department of Economic Development doesn’t have anyone to recruit out-of-state productions.

“It hurts the city, it hurts the state and it ultimately hurts us because we’re forced to go elsewhere for monetary reasons,” said Lynch.

One way to answer the question of whether a lack of film tax credits hurts the state is to look at what film tax credit money has subsidized in the past.

The 2009 film “Up in the Air,” which starred George Clooney, was filmed in Saint Louis, and was issued $4.1 million in tax credits from the state. Under Missouri’s Film Production Tax Credit program, movie productions are reimbursed for a portion of their expenses.

In 2010, the Show-Me Institute requested documentation from the state Department of Economic Development (DED) that showed what expenses associated with the film tax credit program were deemed eligible for partial reimbursement. The documents we received are now posted online.

Below are some expenses that the production of “Up in the Air” incurred and the DED deemed eligible for the Film Tax Credit program:

* More than $11,000 in living allowance money for Director Jason Reitman.

* $5,600 for George Clooney to stay at the Chase Park Plaza.

* More than $8,500 in living allowance money for Vera Farmiga.

* More than $11,000 in living allowance money for Executive Producer Michael Beugg.

If having state taxpayers fund living expenses for high-paid actors and directors while working on “Up in the Air” is not concerning enough, recent reports have found state film tax credit programs lacking.

If Lynch really thinks Saint Louis is the best place to film her movie, then make it here. But if tax credits are necessary, I would prefer she stay in East Saint Louis.

P.S. Lynch is not the first person to think that using film tax credits to subsidize a movie about a serial killer is a good idea. Jack Donaghy ran with that in 2011.

The post Sorry, Film Directors: Taxpayers Should Not Have To Pay For Your Luxury Hotel Rooms appeared first on Show-Me Institute.

Utah’s film tax credit program is less generous than Missouri’s — filmmakers get 20 cents back on every dollar they spend in Utah, but they get 35 cents back for every dollar they spend in Missouri.

According to the article, Utah has “a rare mix of different locales,” “limitless vistas,” and “abundant post-production facilities.” The state is “filled with good, honest, hard-working people,” and boasts “some of the most beautiful countryside.”

Doesn’t that sound familiar? Isn’t that exactly the language that supporters of film tax credit programs use to describe Missouri?

Additionally, from the article (emphasis mine):

“Currently, we offer a 20 percent cash rebate program based on a $1 million minimum direct spend in the state,” says Marshall Moore, director of the Utah Film Commission. It’s an incentive Utah hopes to extend for at least five more years and possibly increase to as high as 30 percent.

This shows how states try to out-compete each other by providing ever-increasing incentive packages to filmmakers. They engage in a bidding war. (I have highlighted before how this happens in the auto industry.) Policymakers have little incentive to keep the amount of these incentives in check, because taxpayers are the ones left to pick up the tab. This is obvious from the article, which says that Utah’s state government is considering increasing the amount of its tax credit. Hopefully, this won’t give policymakers in Missouri a reason to increase this state’s tax credit.

If Missouri and Utah both offered a tax credit of 30 to 35 percent of total in-state expenditures, how is that different than if neither had offered the credit at all?

As regular readers will know, film tax credit programs fail to make money for a state. Most of the production expenses are single-time costs that don’t resonate through the state economy. This is because the residents of the whole state pay for a movie that’s made in one town. A movie in St. Louis, for example, may add to the city’s revenue, albeit briefly, but it does nothing for Hannibal or Joplin. A better way to grow the economy than funneling taxpayers’ money through filmmakers would be to eliminate the program and let Missourians themselves keep their earnings to use as they see fit in the private sector.

Even if states like Utah continued their programs, policymakers in Missouri would be wise to stop providing tax credits to filmmakers. If film productions go to Utah instead of Missouri, Missourians would still be able to see films. However, instead of propping up an entire industry through their taxes, they would only have to pay the price of a movie ticket. I said it before and I will say it again: States would be better off if they disbanded their film tax credit programs.

Some people question whether ending the film tax credit program is feasible or realistic. I believe that it is. For example, the Tax Credit Review Commission recommended eliminating the film tax credit program because they determined that it is underperforming. Policymakers in the Missouri state legislature have yet to act on this recommendation, however. Fortunately for taxpayers, more and more states are realizing that they can entice businesses and industries without targeted tax credits.

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