Yesterday I insisted that states stop subsidizing filmmaking. Implied, I hope, was the notion that states needn’t provide tax credits to lure movie shoots to their state, either.
No sooner did I wrap up that argument (with the premature proclamation “end of story”) than I read a fine article on Show Me Daily about how “States Can Entice Businesses and Industries Without Credits.” The article begins talking about making films in Wisconsin, where the tax credits were just cut by two thirds. And yet the state has nabbed some major film efforts.
According to Show Me, “Wisconsin sets a great example.…” Every state has something going for it, unique locations, geography, architecture, people, climate, what-have-you. “Firms will locate” where they do for relevant reasons; “they don’t need to be bribed with generous incentive packages.”
But, but, but, but! some will sputter. Film companies are special firms. They start up, inhabit a location for a while, and then vamoose. State regulations and business taxation often makes it very difficult to shoot in a particular place. Filmmakers need special help around encumbering bureaucratic obstacles.
I’m sympathetic. For example, the business-and-occupation taxes that increasing numbers of states are instituting are horrendously burdensome: They take from gross revenues, of all things!
But the proper way around such counter-productive laws is outright repeal, setting up better state revenue programs … ones that are not so generally destructive of industry, including the film industry.
This is Common Sense. I’m Paul Jacob.
2 replies on “Cinema Without Subsidy”
Sorry, Paul. In this case, you clearly don’t know what you’re talking about. Just because you can’t see the benefit, doesn’t mean that a benefit doesn’t exist or that it isn’t a wise investment. We’ll talk about Wisconsin in a moment.
You are a big advocate of competition. Well, there happens to be competition between the states for filmmaking dollars. The amount of money that production companies pour into local economies is staggering. It is little wonder that states want some of that money to flow to their own citizens. Subsidies are investments in a states labor force and small business communities, since they are the ones that benefit the most from local film production. The reality is that subsidies help, and they help a lot.
The competition for production dollars makes sense. Why should, as was once the case, ninety percent of motion pictures and television shows be shot in California? Indeed, why should films and television series that take place in, say New York, be shot in California? The answer is money. Until New York established its incentive program, it was for all, except the biggest budget productions, too expensive to shoot in New York. That was New York’s loss. With diminished production opportunities available, New York crews began leaving the state That trend has been reversed and New York has reaped a financial windfall from their subsidies.
As a producer, one of the first things I ask about a location is “How deep is the crew pool?” If the pool isn’t deep, it means I have to bring the crew with me. The reality is, that trained crew pools are needed because no matter how beautiful or fitting a location is, unless there are trained local production personnel are available, it’s usually too costly to bring in everyone needed to make a film unless you’re a major studio production.
Second, Canada and other countries offer generous incentives to entice US production companies to film in foreign locations even when the locations being depicted are in the states. Many of these countries have highly experienced crews in place meaning that the number of people I’m required to travel, is significantly reduced. As an independent producer, if a country offers me a package that amounts to thirty percent or more of my budget and has trained crews, I have to go where I can get the most bang for my buck. My investors demand it.
Third, local or state production incentives benefit the local economy. I will always spend far more in a location than I’ll receive in incentives, many of which have local employment stipulations. Money that would not have been spent in the state otherwise. One recent study indicated that the benefit of incentives for film production exceeded four to one, meaning for every dollar the state spent on incentives, four were returned to the state in the form of taxes, reduced expenditures for unemployment and so on. Some states, like Louisiana and Massachusetts, have well developed incentive programs that generate jobs, tourism and substantial income for the state.
Just because it’s a subsidy, doesn’t mean it’s bad. If I can spend a buck and get four in return, I’ll do it. That’s called good business and just because a government agency is the one making the investment, doesn’t make the investment wrong.
Now, about Wisconsin. Yes, they cut their subsidy which was not much of a subsidy to begin and without a deep crew base and motion picture infrastructure, remained woefully uncompetitive with other states. I know because I have to films that I’m putting together and both take place in Wisconsin. But, I won’t be shooting there. Yes, they have beautiful scenery. Yes, the people are wonderful. But movies are a business. Without an experienced crew base I and established motion picture infrastructure, like other producers, would have to bring my crew and major equipment in from Chicago. Oh wait, Illinois has an incentive program, a motion picture infrastructure and deep crew base and looks like Wisconsin. Why go to Wisconsin when the only benefit is that it’s going to cost me more money?
“Just because it’s a subsidy, doesn’t mean it’s bad.”
Umm, actually it does. You see, subsidies favor some industries and industry players with the ability to use force in order to finance their operations, which is morally wrong. For instance, if I am a competitor of moviemaker A, and I refuse to allow the government to collect taxes to benefit my movie, then moviemaker A has a competitive advantage resulting from monies that were –in part– stolen from me.
Socialism benefits those who seek its benefits, but that doesn’t make those benefits morally right. If every state didn’t grant favors to the film industry, that would be morally right. …But it might make life harder on certain movie makers, and maybe on all movie makers.