Inequality is a hot topic these days. Everyone seems to want to write about it. The launch of TheUpshot, the new project from the New York Times, included a story on the wealth of the middle class, the Times Sunday...
- The Tax Policy Blog
- Iowa Film Credit Report Reveals More Problems; Criminal Investigati...
Iowa Film Credit Report Reveals More Problems; Criminal Investigation Forthcoming
The Iowa film tax credits story just keeps getting better (I guess it's worse, really). Last week the Tax Update Blog reported on even more movie credit unscrupulousness, including feather beds for producers' tired backs and iPods for their offspring.
- Invoices and receipts were missing for 20 of the 22 film projects that received credits.
- Contracts were changed to increase the budget after approval.
- Broker's fees for negotiating credit transfers were claimed as qualified expenditures, generating over $250,000 in credits.
- Limited liability companies (LLC) were set up in Iowa for the purpose of funneling otherwise unqualified out-of-state purchases through the Iowa LLC, making the purchases appear as qualified in-state expenditures.
- Out-of-state purchases were claimed as qualifying in-state purchases. Two of the purchases for one film were over $1 million each.
- Pay for non-qualified labor such as producers, directors, and principal actors were claimed as qualified expenses.
- Credits were claimed for product placement deals in which the producers would include products in their films in exchange for free advertising. These deals listed as qualifying Iowa expenditures totaled $13.4 million even though there was no payment involved with the deals.
And the list goes on. The Attorney General is launching a criminal investigation regarding the troubled film tax credit program, citing the following reasons:
investment tax credits were not calculated according to the statute; expenses were not adequately vetted and verified; projects were not justified in terms of their economic benefit to the State compared to their cost; and the definition of "investment" sometimes was improperly applied.
But the program still has people fighting for it: the people who benefit at the cost of Iowa taxpayers. Even if the credit program wasn't a terrifying example of government mismanagement and waste, it would still be unjustifiably bad tax policy.
Buy this blogger a cup of coffee!
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official weblog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.