Hollywood has reportedly received $25 billion in state tax incentives. That’s a boon for studios like Disney and Netflix, but a big “L” for the average taxpayer who covers the cost of the giveaways.
State tax credits for film and television production, frequently supported by Democrats, are meant to boost local economies by creating jobs and increasing revenue for small businesses that provide services such as catering and transportation. The purpose is That would generate even more taxes.
But even though $25 billion has been spent so far, states have received only a small return on that investment, with research cited in one paper showing that for every dollar donated, Sometimes it’s less than 20 cents. new york times report.
A recent report prepared for Georgia’s state auditor estimates that every dollar spent on incentives returns 19 cents in tax revenue. A similar report from New York found returns between 15 cents and 31 cents.
In some cases, the losses may be even greater. times report.
When Michigan offered tax incentives to Hollywood, the Detroit suburb of Allen Park received $31 million to turn a site that once housed an auto parts manufacturer into a movie studio expected to employ thousands of people. sold dollar bonds. But the plan fell through in 2010, and the city was forced to cut pay for police officers and firefighters as compensation for the debacle.
“The city was taken advantage of,” said Sgt. Firefighter Grant Peace, who took a 10 pay cut, said: times. “And it hurt our wallets.”
Michigan stopped offering prizes about a decade ago after state economists determined that “film incentives represented a loss of revenue” and the economic impact was “negligible.”
But that hasn’t stopped some Michigan Democrats from trying to bring back the Hollywood billionaire.
“We are not on a level playing field,” said state Sen. Dana Polehanke (D). times. She is one of the sponsors of a bill that would restore Michigan’s incentive program, but the form Democrats say would make them more fiscally responsible.
However, many remain skeptical about the effectiveness of such programs.
“There are almost unlimited ways to do better things with the same amount of money,” said Michael Thom, a tax expert at the University of Southern California. times. “Who in the world is going to say, ‘Keep funding Hollywood’? Doesn’t my child’s school need new books?”
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