Note to Utah: Hollywood Didn’t Save California, and it Won’t Save You

October 20, 2010

Film industry advocates are trying to convince lawmakers in Utah to increase the state’s already generous tax subsidy to the movie industry. Industry leaders and economic development officials are not content with the Utah taxpayers only picking up the tab for 20% of film’s cost. They want to increase that to 25%, or ideally 30%. They fear they are losing business to states like New Mexico, which offers a 25% credit. The Associated Press has the story here:

“At 20 percent, we’re just not getting the looks that we’d like right now,” said Marshall Moore, director of the Utah Film Commission.[…]

Spencer Eccles, executive director of the Governor’s Office of Economic Development, said Tuesday his office is still fine-tuning exactly how the incentive program might change, but it would involve a minimum rebate offer of 25 percent to put the state on par with New Mexico.[…]

He said Utah’s proximity to Los Angeles and an existing infrastructure for the industry here means Utah doesn’t have to offer tax breaks as large as some other states to be competitive.

Is it just me or is there a bit of a contradiction in the above paragraphs? In one paragraph Utah is losing business to other states because their subsidy is too small, but in the next Utah does not need to offer as large a subsidy as other states because it is so much better. Which is it?

Either way, if Utah lawmakers think that their infrastructure and proximity to LA can help them hold the line at 25% maybe they should take a look at California. That state, which also has film production infrastructure and proximity to LA, adopted film tax credits in 2009 because they were losing business to film credit states despite the aforementioned advantages. What is going on here is that states are locked in an endless arms race of ever-increasing incentives to win over a relatively small, but politically well-connected and glamorous industry. The only thing that matters is cold hard cash and the race won’t end if Utah increases their credit to 25% or 30%.

Film tax credits are ineffective, terrible policy, and they do not pay for themselves. Utah lawmaker’s would be wise to get out of the race and let other states funnel their taxpayers’ money to movie producers.


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