Film Tax Credits Getting Attention in Some States

April 15, 2011

There has been some recent movement on film tax credits in the states, with at least three states making changes to their credit programs. A couple states have cut back. First, recognizing that the government has more important priorities, New Mexico lawmakers passed and the governor signed a bill that caps the available film tax credits at $50 million per year. $50 milllion is still pretty generous to the film industry, but it is better than no cap at all.

Rhode Island Governor Lincoln Chafee’s proposed budget calls for elimination of the state’s film tax credit which would have paid out an estimated $1.4 million in 2012. The budget has run into opposition, mainly due to provisions that would have balanced the state budget in part by raising taxes by $165 million in 2012. Among other things, the budget would have reduced the general sales tax rate and expanded the sales tax base to include some currently untaxed goods and services and some business inputs. It remains to be seen if future iterations of the budget will also eliminate the film tax credit.

On the other hand, Utah has increased their credit rate from 20% to 25%. As we’ve said before, film tax credits are bad policy and can’t deliver on their exaggerated promises. States are locked in an unending arms race of incentives with the real beneficiaries being the film companies. For more on film tax credits see our dedicated page.

Update: Arizona lawmaker and Chairman of the state’s House Ways and Means Committee recently killed a bill that would have broght the state’s film incentive program back from the dead.

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