A few days ago we wrote about some of the reasons why film tax credits are poor tax policy. They are corporate welfare for a profitable industry, they almost never weigh costs and benefits after enactment, they distort economic behavior, and they paper over deeper business taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. climate problems. We also mentioned censorship—Canada has started vetting movies financed with film tax credits and other subsidies.
The recent proposal to expand this censorship in Canada (spearheaded by the Minister of Heritage) has caused an uproar:
The mayors of Canada’s largest cities say their economies would take a major blow if the federal government is allowed to deny tax credits to film and TV productions it deems too violent or pornographic.
“We share a concern. That concern is about our economy,” Toronto Mayor David Miller, who was speaking on behalf of the mayors, told the Senate banking committee yesterday.
“But it is also about Canadians’ continued ability to tell our own stories to each other without fear of artistic and financial humiliation.”
“Oh, and it violates free speech.” Almost like an afterthought; the concerns seem to be more about preserving the tax subsidy program in its present form:
Mayor Peter Kelly of Halifax added his voice to the opposition.
“Had these proposed changes existed in the past, much of the uniquely Canadian art of which we are so proud, simply would not have made it to our screens,” Mr. Kelly wrote. He cited television shows like Trailer Park Boys and This Hour Has 22 Minutes as examples of productions a government might deem contrary to public policy.
In U.S. constitutional law, there is a doctrine known as “unconstitutional conditions”—essentially, that while the government can impose conditions on receiving grants or subsidies, the conditions cannot amount to surrending constitutional rights. (Prof. Dale Carpenter examined the most recent case to reach the U.S. Supreme Court, the Rumsfeld v. FAIR case in 2006, in which the federal Solomon Amendment denied all federal funding to universities that refused to allow on-campus military recruiting.)
Canadian-style censorship, even if only a condition of receiving a subsidy, might be just such an unconstitutional condition in the United States. Maybe, maybe not. But film tax credits are still a bad idea.
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