Nevada Approves $20 million/year to Subsidize Film and TV Production

Nevada's legislature voted this week to add a film and television subsidy program of $20 million per year. Any individual production can tap a maximum of $6 million per year, and 60 percent of expenses must be incurred in Nevada.

The bill's language and the debate describe it as a tax incentive, but that's hard to do for Nevada because they have neither an individual income tax nor a corporate income tax. Qualified film and television productions will receive transferable certificates that they can use to reduce any state tax liability, or sell to others to reduce their state tax liabilities. It may bear the name "tax credit" but it operates essentially as direct payments from taxpayers to film productions.

Perhaps it was the persuasiveness of Nicolas Cage, or anxiety over California's relatively new (2009) $100-million-per-year film incentive program, or general concern about high unemployment and uncertain economic prospects. Whatever the reason for passage, every independent analysis of film incentive programs has found that they generate less than 30 cents on the dollar in tax revenue for every $1 paid out by state governments. Research by scholars on the left and right has found that most jobs “created” by movie productions are often temporary with limited upward mobility, the kinds of jobs that end when shooting wraps and the production company leaves. Hollywood folks are clear that if the tax spigot is ever turned off, they’re gone. This isn’t a case of the state providing a bit of seed funding to a new industry. It’s subsidizing Hollywood productions for a few weeks’ work. Studio lobbyists are eager to ask for money, but promise no loyalty in return.

Ultimately, there are better uses for scarce dollars that to subsidize one of America's most profitable industries. More about film incentives here.


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