Indiana Lawmaker Premieres Hollywood Tax Credit Handout Bill

Published September 1, 2016

An Indiana lawmaker is planning to introduce a bill to create targeted tax breaks for Hollywood film companies producing media in the state.

In August, state Rep. Christina Hale (D-Indianapolis) announced her plan to propose a bill in the upcoming 2017 session to create a “Indiana Film and Media Production Incentive” economic development program for production companies doing at least half of their film work in Indiana.

If approved by lawmakers and signed into law, companies would receive credit for up to 30 percent of the cost of labor expenses and 20 percent of all other in-state spending, reducing their tax liabilities to the state government.

Justin Stevens, state director of the Indiana chapter of Americans for Prosperity, says government should treat all business equally and fairly.

“Special tax exemptions, loopholes, and subsidies are problematic for businesses, consumers, and taxpayers alike,” Stevens said. “First, they harm businesses and industries that lack the political connections to win these handouts from politicians. They allow government to pick winners and losers in backroom deals with political insiders rather than consumers picking winners and losers on the merits.”

‘Taxes Harm Economic Activity’
Stevens says lawmakers’ fascination with film tax credit program proves they know taxes are too high.

“Tax credits and loopholes are a tacit admission that high taxes harm economic activity,” Stevens said. “If that is true for one business or industry, it is true across the board, and should be addressed as such. Politicians dishing these favors only to the well-connected or sexy industries like Hollywood is a copout that shows a lack of courage or ability to pursue fairer, more fundamental tax reform of low rates across the board absent of corporate welfare.”

Equality for Everyone
Jonathan Williams, vice-president of the American Legislative Exchange Council’s Center for State Fiscal Reform American Legislative Exchange Council’s (ALEC), says lawmakers should not use the tax code to reward or punish behavior.

“The tax system should not be used to punish success or to soak the rich, engage in discriminatory or multiple taxation, nor should it be used to bestow special favors on any particular group of taxpayers,” Williams said.

Williams says states should compete on fairness and equality for taxpayers.

“The liberal view of competition is handing out special favors in the tax code and through subsidies,” Williams said. “This approach of central planning simply empowers government. The more effective way to compete is for states to lower tax rates for all hardworking taxpayers and empower innovation and entrepreneurship.”