Wednesday, March 9, 2011

States Rethink Tax Breaks for Hollywood

Tax breaks given to filmmakers in Georgia helped a beachfront hotel make an extra $85,000 because Miley Cyrus spent a summer filming The Last Song.

The producers of Cyrus' film, were brought in with an across-the-board tax credit of 20% in 2009. Lawmakers in Georgia and other states, though, are worried that they can't afford to offer Hollywood those incentives any longer as they struggle to find enough money to pay for programs like Medicaid. For Spirides, though, the owner of the beach front hotel, the economic benefit was great. The crew rented a parking lot at Spirides' Ocean Plaza Beach Resort for $30,000 to set up makeup trailers and dining tents. Then there were hundreds of families working as extras on the film, who would crash at the hotel after shooting until 2 a.m. In January, though, a Georgia state council said those benefits are short-lived. It said even though the crews bring jobs, and lots of people who spend money locally on food and lodging, those benefits are lost when they pack up and leave after filming.

The council recommended ditching the film tax break, which meant $140.6 million in lost tax revenues last year. Film producers spent $617 million in Georgia last year. An Associated Press survey found that from 2006 to 2008, states shelled out $1.8 billion in tax breaks and other advantages to the entertainment industry. The recession has officials in several states wondering if the incentives are worth the lost revenue. Budget woes prompted New Jersey and Kentucky to place similar caps on film incentives last year. Connecticut, Iowa, Kansas and Wisconsin all slashed spending on their programs in 2009.

But not everybody is cutting back. A few states eager for jobs and spending are offering more money to lure Hollywood productions. "It's a mixed conversation as to, are we giving away money or are we trying to create jobs?" said Todd Haggerty, a tax policy analyst for the National Conference of State Legislatures.

1 comment:

  1. I really like your choice of topic; I think it is definitely something that lures in young readers as an interesting spin in the realm of economics. How do you feel about the tax breaks? Do you think that providing these tax breaks would help or hurt a state’s economy overall? I think that a large amount of movies made within the United States are produced in states that are either widely known for certain cities or attractions like New York, or states along the coasts that have beautiful beaches and ocean views. I don’t think that it’s necessary for every state to provide tax break for Hollywood films. While some states may occasionally be filmed in for a random assortment of reasons, I think that for most states it doesn’t make sense to give up such a large amount of revenue for the possible small amount of time a Hollywood cast and crew would spend there. It seems that a film cast and crew can provide a large amount of profit for a state, but that the risk of not having films shot on a consistent basis is not worth it. I really like your article; I think it is really well written.