President Obama recently gave a lengthy speech on inequality, poverty, and what to do about it. He claimed inequality is increasing, which is debatable, and then offered a few populist ways to reduce it, such as raising...
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- Ohio Doubles Film Tax Credit Program in Wake of Hype Over “Avenge...
Ohio Doubles Film Tax Credit Program in Wake of Hype Over “Avengers”
Even though film tax credits have time and time again proven to not meet the standards of sound tax policy, some politicians are still tempted by the allure of Hollywood in their neighborhood into giving preferential treatment to the film industry. In Ohio, the recent push comes from Ohio Representative Dovilla (R-Berea), who is proud to announce that HB 508, his bill that would double the state’s film tax credit from $20 million to $40 million each year, has passed the legislature:
“Over the past three weeks, moviegoers across the country, and indeed the world, have seen the power of an Ohio film industry with the record-breaking success of The Avengers. Expanding the successful motion picture tax credit program demonstrates our commitment to creating an environment for economic development and job creation.”
While movies are indeed entertaining and seeing your home state on the silver screen may sound sexy to politicians (and maybe even voters), research shows that film tax credits do not deliver where it actually counts. We’ve shown on numerous occasions that states actually lose money by offering these credits. Dr. Frank Hefner, Director of the Office of Economic Analysis at the College of Charleston found in a 2008 study for the South Carolina Coordinating Council for Economic Development that film incentives only returned 19 cents in taxes for each dollar paid out in incentives (page 143 of this report).
Not only do studies show that these incentives do not bring in the tax dollars they are expected to, they are unable to create the jobs that politicians, including Mike Dovilla, generally promise. The jobs created by these incentives are typically filled by out-of-state residents who are skilled in areas specific to film production such as audio production. These residents usually move from state to state following projects as they become available. Also, producing a film is a relatively short project compared to other investment projects, so if a local worker is hired on to work on a specific project he or she could be left unemployed once production has ended.
Ohio is behind the trend in its support of MPIs, as many states have recently chosen to cut back, suspend or drop their programs altogether as the packages fail to deliver on their promises. Arizona, Kansas, Idaho, New Jersey, and numerous other states have scaled back or eliminated their programs within the last several years.
Still, HB 508 faced little opposition by lawmakers in the Buckeye State, passing by a vote of 96-0 in the Ohio House and 29-2 in the Ohio Senate. The legislation awaits a signature from Governor John Kasich (R).
The bill can be read in its entirety here.
More on film tax credits here.
More on Ohio here.
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