Tax Breaks For Movie Makers Don’t Pay Off
With more than a month still to go to the Academy Awards, the Manhattan Institute, a nonprofit, nonpartisan economic research and policy group, has already announced the winner of ‘the Oscar for Best Tax Break‘.
It goes to The Wolf of Wall Street which received a 30 percent tax credit from New York State.
In effect, New York State taxpayers paid for a third of its $100 million in production costs.
The important question is: do these incentives pay off for the states?
The Manhattan Institute reveals the answer is no:
Similar to most targeted tax breaks, movie production incentives routinely fail to deliver on the economic promises made by their proponents. Supporters frequently claim movie incentives create jobs and lead to net gains in tax revenue. However, data from several states find movie production incentives generate less than 30 cents for every lost dollar in tax revenue.
The findings might well also apply in Australia and particularly on the Gold Coast in Queensland where film studios are co-located with a tourist theme park and film productions and production houses have enjoyed varying amounts of government patronage over the years.
Another report on the Manhattan Institute findings suggests:
Film is a particularly poor industry to subsidize because it does not create long-term employment and other lasting economic benefits for states. Even though a well-made film might boost tourism, productions only offer short-term employment and the workers are highly specialized. Production and workers can easily move from one location to wherever better deals are offered.
It could be argued that the Gold Coast film studios, established under producer Dino de Laurentiis in the 1980s, create long-term local employment for those working at the neighbouring theme park. However, it could equally be put that the theme park – essentially a range of movie-themed entertainments and rides – could survive on its own merits regardless of whether or not a real studio tour is available to visitors.
The question for taxpayers is whether or not having Leonardo DiCaprio in town is worth $30 million.