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More States Abandon Film Tax Incentives as Programs’ Ineffectiveness Becomes More Apparent

6 min readBy: Joseph Bishop-Henchman

TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Foundation Fiscal Fact No. 272

Film tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. s fail to live up to their promises to encourage economic growth overall and to raise tax revenue. States claim these incentives create jobs, but the jobs created are mostly temporary positions, often transplanted from other states. Furthermore, the competition among states transfers a large portion of potential gains to the movie industry, not to local businesses or state coffers.

In 2010, a record 40 states offered $1.4 billion in film and television tax incentives. All told, states have provided nearly $6 billion for such programs over the past decade. 2010 will likely stand as the peak year, since many governors and legislators are ending their programs, preferring to use the money for other priorities or leave it with taxpayers. Recent eliminations or suspensions:

That will bring the number of states with programs down to 35 as of next year. Additionally, existing programs are being pared back or challenged:

On the other hand, some states are betting more on these programs:

In short, while film incentive programs were once universally applauded as great economic development tools and tourism boosters, their merits are now being rigorously debated. (Check out this debate that the Midwest is talking about this week.)[28] At a minimum, film incentive programs should be required to report how many dollars in incentives were provided per each Full-Time Equivalent (FTE) job created by qualified productions. Programs should be reviewed periodically for their effectiveness by legislative oversight or a third party.

For more information, see our full report on this topic, “Movie Production Incentives & Film Tax Credits: Blockbuster Support for Lackluster Policy.”[29]

Year States with Film Incentive Program Incentive Amounts Offered
1999 and earlier 4 $2 million
2000 4 $3 million
2001 4 $1 million
2002 5 $1 million
2003 5 $2 million
2004 9 $68 million
2005 15 $129 million
2006 24 $369 million
2007 33 $489 million
2008 35 $807 million
2009 40 $1.247 billion
2010 40 $1.396 billion
2011 37 $1.299 billion

Source: Tax Foundation calculations.

[1] David Madrid, “Arizona Film Projects in Danger if Tax Incentive Expires,” The Arizona Republic, May 26, 2010,

[2] Richard Verrier, “Iowa Film Tax Credit Program Racked by Scandal,” Los Angeles Times, January 19, 2011,

[3] Joe Barrett, “Tax-Credit Fraud Puts Filmmaker in Prison,” Wall Street Journal, May 18, 2011,

[4] “Film Production Credit,” Kansas Department of Revenue, last update October 28, 2010,

[5] Paul Tyahla, “Roll Closing Credits On New Jersey’s Film Subsidy,” Common Sense Institute of New Jersey, March 3, 2011,

[6] Associated Press, “N.J. Assembly to Vote on Bill Reinstating Tax Credit for Film Industry,”, January 9, 2011,

[7] Jordan Schrader, “Lawmakers Kill Film, Newspaper Tax Breaks in Waning Hours,” Tacoma News Tribune, May 27, 2011,

[8] Becky Bohrer, “Alaska Film Tax Credit Program Faces Doubts in House,” Anchorage Daily News, April 14, 2011,

[9] Brian Lockhart, “Budget Tightens Film Credits,” Danbury News Times, May 9, 2011,

[10] Chris Joyner, “Film Industry Pushes to Keep Georgia Tax Credit,” Atlanta Journal-Constitution, March 1, 2011,

[11] Brian Perry, “Lawmakers Sorry Film Tax Credit on Cutting Room Floor,” Maui News, May 14, 2011,

[12] Christopher Brennan, “Effort to Keep Movie Subsidy is Heating Up,” Livingston Daily, May 25, 2011,

[13] Josh Brown, “Two GOP Governors Plan to Spare Film Tax Credits,” Washington Times, March 20, 2011,

[14] Kelsey Volkmann, “Tax Credit Cuts Would Save Missouri $220M,” St. Louis Business Journal, November 30, 2010,

[15] “$45 Million Cap on New Mexico Film Credit May Help Industry, Not Kill It,” Runaway Production Research, March 7, 2011,

[16] “Susana Martinez’s Proposal to Scale Back Film Tax Incentives,” KRQE News, New Mexico Film, Photography and Music Network, January 12, 2011,

[17] David Klepper, “Filmmakers Urge RI Not to End Film Tax Credit,” Bloomberg Businessweek, March 25, 2011,

[18] Jack Craver, “Is the Wisconsin Film Tax Credit Worth It?” Isthmus Daily Page, May 5, 2011,

[19] Joseph Henchman, “FilmWorks Blog Criticizes Tax Foundation on Industry’s Dependence on Film Tax Credits,” Tax Foundation Tax Policy Blog, April 26, 2011,

[20] Minnesota Management and Budget, “Governor’s Recommendations: Economic Development,”

[21] Frank Jossi, “That’s a Wrap: Final ‘Snowbate’ Film Ends Shooting,” All Business Finance & Commerce, Mar. 23, 2010,

[22] Joe Schoenmann, “Assembly Movie Bill in Danger of Hitting Cutting Room Floor,” Las Vegas Sun, May 12, 2011,

[23] Dave Larsen, “Arts Keep 80% of Funding; Film Tax Credits for Movies Stay,” Dayton Daily News, March 16, 2011,–1109011.html.

[24] “Film Tax Credit Saved in Deep Budget Cuts,” KDKA Pittsburgh, March 9, 2011,

[25] Sean P. Means, “Utah Raises Its Motion-Picture Tax Incentive,” The Salt Lake Tribune Movie Cricket Blog, March 29, 2011,

[26] “McDonnell touts film incentives,”, June 2010,

[27] “Wyoming Film Incentives Extended,” Wyoming Film Office Blog, February 17, 2011,

[28] “Beckmann vs. Albom Slugfest,” The Michigan View, May 18, 2011,

[29] Will Luther, “Movie Production Incentives & Film Tax Credits: Blockbuster Support for Lackluster Policy,” Tax Foundation Special Report No. 173, January 14, 2010,