Are Tax Breaks for Hollywood Really Necessary?

Many movies and TV shows have been filmed in Bucks County, the Greater Philadelphia area and Pennsylvania in general, but should tax payers subsidize it?

By Eric Boehm | PA Independent

HARRISBURG – An Associated Press article posted this morning at various Pennsylvania news outlets sings the praises of the state’s Film Tax Credit program and subtly encourages the state to ratchet up the current $60 million annual give-away to Hollywood.

Over the course of about 700 words, the story quotes three sources in support of the tax credit program– they make the usual arguments about how the tax credit lures production companies to Pennsylvania, offering residents of the Keystone State the chance to have a temporary job getting coffee for the “Best Boy” or “Key Grip” or any of those other production jobs that no one actually understands outside of Tinseltown.

Here’s how it works, and what the advocates say:

“The current incentive essentially offers a 25 percent tax credit to productions that spend 60 percent of their budget in Pennsylvania. Capped at $60 million, the program this year is helping to fund eight feature films, one documentary, eight TV episodes, a pair of TV series and one TV pilot.

The credit needs to be at least $100 million, said Pittsburgh Film Office director Dawn Keezer…

…She noted the state is vying against places like New York and Georgia, which offer 30 percent credits. And New York’s multiyear program — now at $420 million annually — extends through 2014.”

But the article lacks any source questioning the legitimacy of this $60 million tab – though Senate Majority Leader Dominic Pileggi, R-Chester, does make an appearance to point out that basic budgetary needs have to be met before the state can consider increasing the tax credit.

It shouldn’t have been that hard for the AP to find someone to debunk the tax credit program’s effectiveness – even groups that rarely agree on policy can find common ground in the evidence that these tax credits are a waste.

The Center on Budget and Policy Priorities, a liberal Washington D.C., think tank, published a lengthy piece in 2010 debunking many of the common arguments for film tax incentives.

Closer to home, the Commonwealth Foundation, a Harrisburg-based free market think tank, also has plenty of good information on how the film tax credit costs more than it is worth.

The Associated Press article does accidentally stumble onto a good point though – Keezer tells the news organization that the third installment in the recent Batman trilogy filmed in the Pittsburgh area, bringing with it “thousands” of jobs.

However, the article notes that “Batman: The Dark Knight Rises” did not get any tax credits from the state.

If blockbusters like that are going to film in Pennsylvania without a taxpayer-subsidized incentive, why did we spend $3.3 million to host the filming of “My Bloody Valentine” or $36 million for “The Last Airbender?

Contact Boehm at Eric@PAIndependent.com and follow @PAIndependent on Twitter

Siobhra DeWar November 25, 2012 at 11:38 AM
We should review the script. Does it reflect well on the state and the region? Is it a movie or show we want to show? A Civil War movie that shows our historic sites great. One that shows other assets our state has to offer is also great. These might bring more visitors later. Or movies that might bring new companies. But filims that have no really value and maybe make our state look bad are a big no.
Phil Carroll November 25, 2012 at 04:55 PM
As a local filmmaker, I personally know the positive impacts of the tax credit system. If the state were to raise the tax credit, there would be more job opportunities for filmmakers in the state. Right now, when the tax credits dry up, bigger, high paying productions decline on shooting in PA, which means PA filmmakers cannot find local jobs to work on. Temple University is one of the best film schools on the East Coast, but when students graduate, they cannot find work in their own city or state because other states have better incentives. PA's film industry cannot grow unless we keep local talent here. If PA were to raise their tax credits, more larger film productions would be enticed to set up shop in the state. But even more importantly, local productions would be able to tap into the tax credits, increasing the output of local films and helping to ensure PA is an active part of the film industry.
James Kephart Jr. November 25, 2012 at 05:44 PM
Maybe we can take money we get from gas/oil drilling impact fees and use that money to pay the Hollywood elites to film here! Let me get this straight, we see gas and oil companies making a profit off a resource in the area and we want to tax them for it (fair enough - impact fees : we may need to beef up some roads and bridges, we may need to plan for accidental spills, we may need to.... give some of that money to places not impacted at all - like philadelphia? ????????????). Yet, now we have this resource (Bucks County) that filmmakers may want to use in order to make a profit, but instead of taxing them for the privilege, we want to give them tax credits? No talk of taxing them more for the added cost of police resources or for the inconvenience of shutting down some sections of the county. No offense to you in the film industry, but do you see the hypocrisy here? I could make the same argument : tax credits would bring in more drilling and more job opportunities for drillers in the state. But we are not talking about credits in my industry. We are talking about squeezing more out of them. Oh that's right, you don't like gas and oil drilling - or the coal industry - after all, look what they did back in the 1970's! Very typical and very much the reason why this country is in the state it is. Let us take from those that can support themselves, and use their money to subsidize those that cannot support themselves.
Jeff Lugar November 25, 2012 at 08:28 PM
If there's gas to be drilled under PA soil, there's no choice but for the companies to come here to get it. There's no reason to give them credits, since if they want it badly enough they'll come get it. On the other hand, film productions don't have to come here. For movies and TV, any number of places can double as other places, so we're competing against those other communities/states; you can find a place that looks like historic Bucks County from here on northward to the Canadian border. Anything can be negotiable, and in this case the taxes are negotiated or credits offered beforehand.
James Kephart Jr. November 26, 2012 at 07:15 PM
Jeff, Point taken. I would argue that gas and oil companies will go first, where they are taxed the least. However, PA is apparently more generous than I thought with respect to gas and oil companies. I just saw a nickel a gallon promise for 20 years for a refinery being discussed in Pitt.


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