Film tax credits won’t make you a movie state

I like Oliver Stone’s movies, but do I like them so much I’d offer the famed director of “Platoon,” “Natural Born Killers” and “Any Given Sunday” $10 million from the public treasury?

New York City paid Stone to film “Wall Street 2: Money Never Sleeps” on Wall Street when the director and 20th Century Studio used film tax credits made available by the city. One could assume Stone already had an incentive to use Wall Street as the location for “Wall Street 2,” but New York City saw it otherwise reported The New York Times in 2012.

The example of “Wall Street 2” is only one example of the ways states and localities have tried to attract blockbusters. Another recent example is with House of Cards. Located in Maryland, the show runners sent a letter to Gov. Martin O’Malley, a Democrat, in which they threatened to move production out of the state unless the state offered the show more film tax credits. According to Next City, production has already received $11.6 million.

More than one commentator has already said this appears as if it were an actual storyline of the show with such a Machiavellian (or Underwoodian) threat, but it shows the terrible way states are forced to pay money for activities that most likely would have been carried out in any case. Due to Maryland’s proximity to Washington D.C. there was already an incentive for “House of Cards” to be filmed in its current location.

There is a problem with this method of economic development. One is that the local jobs supposedly created by film tax credits are seasonal and often do not pay well. Second, so many states offer film tax credits, that they’ve all but come to be expected by the industry and have little to do where they locate. They take the money simply because someone is offering money.

A report by the Lincoln Institute of Land Policy, “The Role of Local Government in Contemporary Economic Development,” said one benefit of local economic development is states and localities can focus on their regional strengths and build on them. Too many states appear to be under the impression that these film tax credits will make them the next Hollywood.

They won’t.

This isn’t to say the Golden State won’t lose any business to other states. But it is to say that Georgia, which offers generous film tax credits, will not become the next Hollywood. The reason is that most movie studios are still located in California. Many stars live in California. Film directors such as George Lucas and Steven Spielberg live in California.

Hollywood is the place where stars are made, and where they stay. The state may well lose the arms race with film tax credits, but it has the edifice—the system—for movie making. New York City is not Hollywood. Georgia is not Hollywood. Michigan is not Hollywood, a lesson we learned in 2011.

In 2007, after investors received film tax credits from former Gov. Jennifer Granholm, a movie studio was built from the former ruin of an abandoned auto plant in Pontiac. When the movie studio was completed in 2011, it went bust. After the movie studio’s investors had received $14 million in film tax credits and other financial awards, and made only one film, it collapsed, and collapsed the local economy with it.

“You’ve got all these governors who are offering tax incentives to businesses to move from one state to another,” said Granholm in an article by the New York Times. “What a lousy economic strategy that is.”

Currently, 45 states offer film tax credits to the tune of $1.5 billion nationwide, yet there is still only one Hollywood.

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