Does the Film Industry Need Taxpayer Subsidies?

by Aaron Lief, Grassroot Institute, July 5, 2016

In Hawaii, films that cost more than $200,000 to produce receive a 20-25% tax credit. “Calling them tax credits is a bit of a misnomer,” pointed out Marc Kilmer, analyst with the Advance Arkansas Institute, “A lot of the time, they’re simply checks.”

In theory, these subsidies attract big budget films, which enrich the local economy with their spending. However, the gains are largely in the short term. “They don’t really have a long term economic effect,” said Marc, “In Michigan for instance, Michigan had very generous subsidies for the film industry, and not one permanent job resulted from their subsidies.”

In addition to their temporary nature, film tax credits have a fatal flaw: competition. “Other states will offer even more generous subsidies and lure the films away,” said Marc, “It’s almost like a race to the bottom… If you’re offering a 20% subsidy, then another state offers a 25% subsidy, these highly mobile productions can just move to another state.”

Read Marc’s report, “The Folly of Film Subsidies.”

This interview was recorded as part of The Grassroot Institute of Hawaii with Dr. Keli’i Akina, a radio show on KAOI 1110AM Maui. Listen to the full interview here: