New York State lawmakers approved a bill expanding the state’s film tax-credit program.
Senate Bill 6987, approved by the New York State Assembly in June, expands the New York State Film Production Tax Credit program to include eight additional counties in southern Upstate New York.
If approved by the New York State Senate and signed into law by Gov. Andrew Cuomo (D), film companies doing business in that region will receive refundable tax credits worth 40 percent of their costs. Companies producing films or television shows in New York State are currently refunded between 30 percent and 55 percent of their costs, depending on where in the state they film and the credit programs for which they qualify.
The bill would expand the geographic area in which film companies will qualify for the 40 percent credit.
‘Enriching Movie Producers’
Jared Meyer, a fellow at the Manhattan Institute for Policy Research, says film tax credits target Hollywood actors and directors, instead of benefitting all taxpayers.
“It’s all about enriching movie producers of a favored industry with taxpayer money,” Meyer said. “Every single economic study has found that film tax credits do nothing to increase the state’s economic growth.”
Michael Thom, an assistant professor at the University of Southern California Sol Price School of Public Policy, agrees film tax credits benefit members of the film industry and few others.
“The best-case scenario is that some tax credits have a small, short-term impact on the wages paid to people already in the film industry,” Thom said. “Most studies show the incentives are a waste of money.”
‘Race to the Bottom’
Meyer says lawmakers in other states around the nation are increasingly refusing to use tax credits to pursue film production.
“This isn’t long-term economic activity, and it is a race to the bottom for lawmakers to see who can subsidize film the most,” Meyer said. “Thankfully, a lot of states are eliminating them, but we have some like New York and California that continue to dig themselves deeper and deeper into this hole.”
‘Stay Out of the Way’
Thom says lawmakers who want to boost their states’ economies should look at making real reforms.
“Better options for stimulating economic growth are for government to cut red tape, stay out of the way, and stop picking winners and losers,” Thom said.
Thom says both free-market and pro-government economists agree on the futility of film tax credits.
“It says a lot that both liberal and conservative think tanks have come out against film tax incentives,” Thom said. “For both to agree is a rarity.”