"Tax Me If You Can" The movie industry wants to tax everyone but themselves.
REVIEW & OUTLOOK MARCH 14, 2009 Tax Me If You Can Article-Wall Street Journal
We're constantly told that taxes don't matter to business and investors, but listen to that noted supply-side economist, Alec Baldwin. The actor recently rebuked New York Governor David Paterson for threatening to try to help close the state's $7 billion budget deficit by canceling a 35% tax credit for films shot in the Big Apple.
"I'm telling you right now," Mr. Baldwin declared, "if these tax breaks are not reinstated into the budget, film production in this town is going to collapse, and television is going to collapse and it's all going to go to California." Well, well. Apparently taxes do matter, at least when it comes to filming "30 Rock" in Manhattan.
Believe it or not, Mr. Baldwin's views are shared across the movie industry, which is pleading in state capitals across the country for most-favored-tax status. Hollywood productions are highly mobile and can film just about anywhere. So they have taken to shopping around the country -- and the world -- for the most lucrative tax avoidance deal.
According to the Motion Picture Association of America, nearly 40 states have corporate tax carve outs or generous cash rebates to lure movie studios to their states. In Michigan, producers negotiated a 40% tax credit on their production costs. A bipartisan bill introduced in the Texas legislature last week and supported by Governor Rick Perry would allocate $60 million into the Texas Film Incentive Program. Members of the Screen Actors Guild held a rally last week in front of the state capitol urging the tax breaks.
In some cases these state tax credits exceed a company's tax liabilities, which means that Disney, Dreamworks and others can get a net cash subsidy from state taxpayers. "In many states, today, movie producers actually pay a negative tax," says a Tax Foundation report on the subject.
The Hollywood studios are ruthless profit maximizers and are expert at playing state suitors against one another. In the midst of California's recent $42 billion budget showdown, producers threatened to leave the state if the legislature didn't offer more inducements. So lawmakers in Sacramento gave the industry a new $250 million deal to stay put.
The film "Annapolis," about the Naval Academy, was supposed to be shot in Maryland, but producers negotiated a better offer in Pennsylvania shortly before filming was set to begin. So they packed the trucks and drove up the interstate to save $10 million on their taxes. A film based on the John Grisham novel, "The Runaway Jury," is set in Mississippi but filmed in Louisiana thanks to tax incentives.
Of course, this is the same Hollywood film industry whose members fund causes and candidates that favor raising taxes on everyone else. The Motion Picture Production and Distribution industry last year gave $14 million in political contributions: 89% went to pro-tax Democrats. A few years ago, director Rob Reiner funded a successful California initiative to raise the state income tax rate to more than 10%. Unlike a film shoot, which can relocate on a moment's notice, your average small businessman in Encino is stuck paying the highest tax rate in the country -- at least until he gives up and moves to Reno.
We've got nothing against industries trying to reduce their tax liability. Shareholders expect nothing less. When we asked the Motion Picture Association to justify these tax breaks, a spokesman gladly pointed to studies showing that the industry is creating thousands of jobs and hundreds of millions of dollars of new investment in the likes of Michigan and New York. Fair enough. This is called "dynamic analysis." The movie industry's tax machinations are irrefutable evidence that low tax rates do affect business decisions.
As a general principle, however, states shouldn't chase smoke stacks or film production crews with specific tax breaks. It makes much more sense for cities, states and the federal government to lower tax rates for everyone. New York City can survive without Alec Baldwin and "30 Rock," but it can't function without the thousands of small businesses that pay taxes without the benefit of lobbyists and loopholes.
Personal Observation: Liberal Hollywood thinks it is fine to take away historical and, deserved, tax breaks from the Oil & Gas Industry (as they say such tax breaks are said to be "obsolete" and "un-needed".Plus the "Evil" Oil & Gas Industry makes obscene amounts of money! After all they deal in the polluting fossil fuels trade which is "Evil" in their worldview;
Movie star run around in tiny economy cars (for public sightings), yet keep their big SUVs and limos hidden in their backyards until needed.
If Congress wants to cap bank executives wages at $500,000 per year, let them cap movie & TV stars and movie executives at the same money. For, after all they are taking taxpayer's money (or taking tax breaks-same thing). Also as they have more "toys" (airplanes, stretched Hummer limos, etc. Let's make them put all of their toys on EBay!
While we are at it, lets include singers and sports stars, in the wage cap and their toys, to make it a "Level" playing field.
We're constantly told that taxes don't matter to business and investors, but listen to that noted supply-side economist, Alec Baldwin. The actor recently rebuked New York Governor David Paterson for threatening to try to help close the state's $7 billion budget deficit by canceling a 35% tax credit for films shot in the Big Apple.
"I'm telling you right now," Mr. Baldwin declared, "if these tax breaks are not reinstated into the budget, film production in this town is going to collapse, and television is going to collapse and it's all going to go to California." Well, well. Apparently taxes do matter, at least when it comes to filming "30 Rock" in Manhattan.
Believe it or not, Mr. Baldwin's views are shared across the movie industry, which is pleading in state capitals across the country for most-favored-tax status. Hollywood productions are highly mobile and can film just about anywhere. So they have taken to shopping around the country -- and the world -- for the most lucrative tax avoidance deal.
According to the Motion Picture Association of America, nearly 40 states have corporate tax carve outs or generous cash rebates to lure movie studios to their states. In Michigan, producers negotiated a 40% tax credit on their production costs. A bipartisan bill introduced in the Texas legislature last week and supported by Governor Rick Perry would allocate $60 million into the Texas Film Incentive Program. Members of the Screen Actors Guild held a rally last week in front of the state capitol urging the tax breaks.
In some cases these state tax credits exceed a company's tax liabilities, which means that Disney, Dreamworks and others can get a net cash subsidy from state taxpayers. "In many states, today, movie producers actually pay a negative tax," says a Tax Foundation report on the subject.
The Hollywood studios are ruthless profit maximizers and are expert at playing state suitors against one another. In the midst of California's recent $42 billion budget showdown, producers threatened to leave the state if the legislature didn't offer more inducements. So lawmakers in Sacramento gave the industry a new $250 million deal to stay put.
The film "Annapolis," about the Naval Academy, was supposed to be shot in Maryland, but producers negotiated a better offer in Pennsylvania shortly before filming was set to begin. So they packed the trucks and drove up the interstate to save $10 million on their taxes. A film based on the John Grisham novel, "The Runaway Jury," is set in Mississippi but filmed in Louisiana thanks to tax incentives.
Of course, this is the same Hollywood film industry whose members fund causes and candidates that favor raising taxes on everyone else. The Motion Picture Production and Distribution industry last year gave $14 million in political contributions: 89% went to pro-tax Democrats. A few years ago, director Rob Reiner funded a successful California initiative to raise the state income tax rate to more than 10%. Unlike a film shoot, which can relocate on a moment's notice, your average small businessman in Encino is stuck paying the highest tax rate in the country -- at least until he gives up and moves to Reno.
We've got nothing against industries trying to reduce their tax liability. Shareholders expect nothing less. When we asked the Motion Picture Association to justify these tax breaks, a spokesman gladly pointed to studies showing that the industry is creating thousands of jobs and hundreds of millions of dollars of new investment in the likes of Michigan and New York. Fair enough. This is called "dynamic analysis." The movie industry's tax machinations are irrefutable evidence that low tax rates do affect business decisions.
As a general principle, however, states shouldn't chase smoke stacks or film production crews with specific tax breaks. It makes much more sense for cities, states and the federal government to lower tax rates for everyone. New York City can survive without Alec Baldwin and "30 Rock," but it can't function without the thousands of small businesses that pay taxes without the benefit of lobbyists and loopholes.
Personal Observation: Liberal Hollywood thinks it is fine to take away historical and, deserved, tax breaks from the Oil & Gas Industry (as they say such tax breaks are said to be "obsolete" and "un-needed".Plus the "Evil" Oil & Gas Industry makes obscene amounts of money! After all they deal in the polluting fossil fuels trade which is "Evil" in their worldview;
Movie star run around in tiny economy cars (for public sightings), yet keep their big SUVs and limos hidden in their backyards until needed.
If Congress wants to cap bank executives wages at $500,000 per year, let them cap movie & TV stars and movie executives at the same money. For, after all they are taking taxpayer's money (or taking tax breaks-same thing). Also as they have more "toys" (airplanes, stretched Hummer limos, etc. Let's make them put all of their toys on EBay!
While we are at it, lets include singers and sports stars, in the wage cap and their toys, to make it a "Level" playing field.
Views: 46
Replies to This Discussion
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Permalink Reply by Mr Hanky on
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I think even Obama and the other liberals now acknowledge that lower taxes on productive people and businesses = more productivity. They just don't think it's fair so they won't consider it.
Gotta spread that wealth around. Gee, how's that going zero-bama? Kinda hard to spread it around after you've destroyed trillions of dollars of wealth. Or maybe that's what he means -- not spread the wealth down, but spread the pain up.
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Contrary to what Robert Gibbs tried to say last week, the stock markets are a leading, anticipatory indicator. Mr. Market does not like the looks of our future under the Obama plans (those enacted and those proposed), so has gone way down. Moreover, every time "Timmy" Geitner has had something to say, the market has tanked.
The scariest thing is, Obama doesn't care. In his mind, the wealthy people don't deserve their wealth, so it's just as well that it's getting destroyed.
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One more example of gov't choosing the winners and losers. In this case, it's the politically-connected movie industry.
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It hasn't happened yet. Just let those connections do their work. Just as they have in California:
From the article: In the midst of California's recent $42 billion budget showdown, producers threatened to leave the state if the legislature didn't offer more inducements. So lawmakers in Sacramento gave the industry a new $250 million deal to stay put.
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I thought one of the principles of liberalism was that taxes don't affect behavior or productivity. Yet here we have a liberal-dominated industry going all over the place and playing states (and even countries, such as Canada) off each other to get the best tax situation.
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Exhibit 1 of "people that don't understand business" would be our community-organizer, present-voting, president.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Jim. The movie industry has found Louisiana in general, and Shreveport-Bossier in particular, to be a good place to do business. So much so that a number of buildings have been converted to sound stages and supporting uses. There is a wave tank. From the filming of The Guarian. Millennium Films is now constructing the first major studio conplex. An indication that they plan to make movies in Shreveport-Bossier for many years to come. There are now quite a few "permanent jobs". And many new supporting businesses. The tax credits worked. And this area is now referred to as Hollywood South. By the industry.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Arlena Acree at the city's film office would have the specifics. I personally know of several businesses that relocated here to serve the film industry. Probably the least obvious but most gratifying economic impact is on existing businesses. Catering, dry cleaning, lodging, transportation, etc. There are three local sound stages that make use of vacant or underutilized structures. The old AT&T plant on Mansfield Road would be sitting empty if not for the film industry. The local supporting businesses have grown. Organically and by transplant. The economic benefits are real. You just have to know where to look or who to talk to.
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Permalink Reply by El Theo on -
There is nothing wrong with tax breaks for the film industry. It is a business that thrives on prosperity and lower taxes help them be more dynamic in creating jobs and economic prosperity.
I work for the largest paint company in North America. The corporation employs almost 40,000 folks all day everyday. This company does not get carte blanche tax incentives. If it is good for the film business, why isn't it good for the paint business? I mean if corporate tax rates are going to rise as a result of increased spending, why should my company feel the pinch more than hollywood, wherever hollywood resides at that moment?
Like I said, I'm not against tax breaks to fuel job growth but lower costs and lower taxes spurs growth throughout ALL industries, not just a select few. If they would lower corporate income taxes, capital gains taxes etc., then it would be BUSINESS that makes the economy grow and not GOVERNMENT that is propping it up.
My example of how things are going is this: A young couple working to make ends meet could use their own judgement and decide to buy diapers and formula for their baby with thier money, or the government can decide to take more of it, give some to an elevated railroad project or a study on swine smell in a pig producing state. I think if more young couples were better educated about the political process they would say to heck with smelly pigs, I have kids to feed, diaper and educate. With socialism, the government thinks it can choose to spend your money more wisely than you or some young couple can.
Personally, I strongly disagree with that premise.
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Permalink Reply by El Theo on
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Sorry Mr. Krow, but all young couples with kids do not receive a check. As a matter of fact, the better a young couple achieves, the more they are taxed (as it should be). However, the government still thinks it can make decisions about how to spend that couples' money better than they can. I still strongly disagree with this premise. The country is better off with LESS government in my opinion versus more.
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Permalink Reply by Cathaus on
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Those of us with small businesses have appreciated the movie industry. During the lean times, we could count on the industries shopping with us. They came back time after time to buy from us. Some of the movies were low budget and we only rented furnishings to them but the large budget movies readily spent their money with us. I say offer them enough tax incentives to keep them local.
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