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At Pew’s very useful Stateline site, Will Wilson has an article that sent me hunting for my blood pressure meds:
Of the nine film productions up for best picture at Sunday’s Academy Awards, five received financial incentives from state governments. But if you want to find out exactly how much help the films got, only some of the states will come forward with the answer.
This happens to be a real pet peeve of mine. Of all the nefarious corporate subsidies that state governments shower on the un-needy in order to screw each other in a mindless race-to-the-bottom competition, few are as unworthy yet lavish as those offered to the film industry. It’s become a true craze in recent years, as popular with Democratic as with Republican pols, probably because it seems to fall into that public policy netherworld between “economic development” and “tourism promotion,” and also lets elected officials rub elbows with Hollywood celebrities while voters get to jostle for unpaid “extra” work.
As Robert Tannenwald of the Center for Budget and Policy Priorities explained in a 2010 report, state film subsidies tend to produce little in the way of tangible benefits despite unusually large costs (an estimated $1.5 billion in 2010). The subsidies don’t just involve garden-variety tax abatements or technical assistance, either:
States incorporate one of two rare features into their film tax credits — refundability or transferability— that makes them especially generous and therefore costly to sponsoring states. If a producer lacks sufficient tax liability to use all of a refundable film tax credit, the state pays the producer the whole credit anyway, in effect giving the producer an outright cash grant….
Transferable tax credits are also lucrative deals for film producers and in the long run just as costly to the state. Producers can sell such credits to other companies that owe taxes to the state, regardless of their line of business. The sale is usually undertaken with the assistance of the state itself and/or a financial intermediary that packages purchased film tax credits from multiple states to make them more attractive to potential purchasers.
It’s unsurprising, then, that film producers discourage publicity about the actual value of state subsidies, as Wilson notes:
Generally, states will reveal aggregate figures showing how much in the way of incentives they gave the whole industry in a given year. And it is not hard to find out if a particular production got some help from a certain state. What is more shrouded in secrecy is the dollar amount for individual productions. According to Good Jobs First, a watchdog that maintains a database of state economic development subsidies, only one-third of the states that offer film incentives reveal how much they give to individual productions.
Many in the film industry view that information as a trade secret, one that states have no business revealing. Dama Claire, a consultant who works with producers to identify and acquire the best incentives for their films, says states that insist on disclosure could see productions go to states that don’t. “Disclosing the amount of tax credits may be akin to asking about a state tax return, which is privileged,” Claire says.
Uh-huh. But treating taxpayer subsidies as a “trade secret” can also hide some serious funny stuff:
[R]ecent scandals have shown just how film credits can be abused. In Iowa, a state film tax credit program was suspended after the state auditor documented misdeeds by both film producers and the head of the state film office. And just this past December in Massachusetts, movie director Daniel Adams was indicted for allegedly inflating his expenses for two films in order to boost the tax credit award he would receive from the state.
People also went to the hoosegow for film program corruption in Louisiana, one of the states that pioneered lavish film subsidies.
In most cases, film subsidies involve waste more than corruption, but at a time when state governments are in such dire fiscal straits that they are undermining economic recovery by laying off employees, it’s still an ongoing scandal.
So when you watch the Oscars and all the associated glitz, keep in mind your tax dollars may be at work.
Here are the best-picture nominees that received state subsidies (via Wilson’s article):
The Descendants (Hawaii); Extremely Loud & Incredibly Close (New York); The Help (Mississippi); Moneyball (California); and The Tree of Life (Texas). Four other nominees received subsidies from foreign governments. The Artist appears to be the only film that paid its own way.
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Crissa on February 22, 2012 2:21 PM:
I'm okay with paying to get media made about or in a state. From Japan, it gets us constant slice-of-life stuff which would never be put in an American production of the same budget. But they put constraints on the content that must be added and how much they're giving them.
Transparency is really the issue here, and there doesn't seem to be any. Which is a big problem.
Ken D. on February 22, 2012 2:24 PM:
"Race to the bottom" is right. Film subsidies have always seemed to me like one of the clearest examples of the phenomenon. If one state does it, great. If five do it, not so great, but maybe OK. When you get up to 10 or 20 or 30, the taxpayers lose and the film makers win.
martin on February 22, 2012 2:38 PM:
The Artist is French, I doubt there is a European film made today that does not get some form of state subsidy, though they are usually for benefitting the arts, not for attracting business.
Giving subsidies to Hollywood films is the minor league version of building football stadiums for richer than god teams. Not even in the same league, but still annoying.
Full disclosure, I run a non-profit movie theatre and have received a few crumbs of gov't money (and hope to get a full meal in the future).
As far as Hollywood misusing the money, i"M SHOCKED!!
How do you say F**K Y*U in Los Angeles?
"Trust Me."
martin on February 22, 2012 2:41 PM:
just checked IMDB on The Artist, here's one of the production companies:
Le Tax Shelter du Gouvernement Fédéral de Belgique
sounds like gov't subsidy to me
SadOldVet on February 22, 2012 2:46 PM:
WTF is a billion or a billion & a half? Spread across how many total films?
That is piker level stuff! Here in Indianapolis, the taxpayers contributed a cool billion just to build the palace that the stupid-bowl was played in this year. Naturally, the Irsay family gets all of the revenue. But the taxpayers did get to pick up the $35 Million still due on the old stadium that was torn down. The major reason that a new stadium was required was that there were not enough skyboxes and too many of the season ticket holders (whose tickets are subsidized by tax write-offs) had to share common space with the peons!
Of course, that is just starter level crapola! A number of years ago, the taxpayers spent $400+ Million to build a basketball arena for the Simon brothers. Same reason as for the football stadium that the basketball arena was needed. As the basketball arena built for the largest property owners in the country is a money loser, the taxpayers also get to throw in about $35 Million a year to cover the 'operating losses'.
About the same time, the taxpayers spent about $350 Million to build a 'mall' in downtown Indy for the Simon brothers.
Ed, if you want to get really upset about public money being spent to finance private businesses; there are a lot bigger fish to fry than the film industry.
DAY on February 22, 2012 2:58 PM:
Ah, for the good old days; when Clint Eastwood's "Italian" Spaghetti Westerns were filmed in Yugoslavia.
And Vietnam War pix (e.g. Apocalypse Now) were shot in the Philippines. With the helicopters provided by President Marcos.
TCinLA on February 22, 2012 3:53 PM:
Being, I believe, the only film production professional posting at this blog, allow me to utilize my knowledge and experience of the industry to take a contrary opinion.
First, I am not here to support this sort of thing going to major studio productions. I am however, right up in the front line of defending it for independent productions, the place where one is likely to actually see quality in the final product as a result of the effort.
I can tell you from direct personal involvement that finding every dime one can, even pennies, to help finance an independent is crucial to it ever being done. Those of you old enough to remember when independent films started to become important in the 1980s, and then sort of disappeared, might note the coincidence that the number of films done diminished after the tax reforms of 1986 that removed the tax shelters used by investors in independent films. Were they all great? Probably not, but to me there were more better films then than there are now (back then I used to go to the movies every Friday night to see what was out there; now if I go to the movie theater twice a year it's a big deal).
And yes, Day, those were good old days, when Vietnam movies were produced in the Philippines, and not just with the support of President Marcos. "Platoon" wouldn't exist without the support of Cory Acquino's government. Neither would any of my low-budget Vietnam movies. Be thankful that nowadays Poland, the Czech Republic, and Bulgaria are available that way, because if you want any sort of a "period piece" or something that doesn't involve blowing up robots, those are the countries where it is most likely the film will be produced.
There are a lot of people, the ones who work "below the line" who most of you don't consider, who wouldn't work at all if they couldn't find jobs on films using these subsidies. Why do you think so much television gets made in Canada???
Art (bear in mind my definition above of the films that deserve this help) has always been subsidized by society. Does it always lead to profit? That depends on your definition of that word. "Profit" for society, to me, is more than dollars and cents, otherwise everything would just be more widgets.
I'll be happy to support reforms that insure these subsidies actually get used for production and not for some scam to a fast-talking con artist masquerading as a producer (though I have to admit that it's a fine line between a good producer and a fast-talking con artist, and some of the best producers I know are fast-talking con artists), but that can be done. In the name of austerity, however, we don't need to be throwing the proverbial baby out with the proverbial bathwater.
Doug on February 22, 2012 7:18 PM:
I rather think it's the "tranferability" of the state-offered credits that needs to be looked at.
IF the production company uses that money to cover its' expenditures, or part of them, while filming in the state, that might be a bearable state expense, if only for the publicity generated by the filming.
However, to allow those credits to be sold AT ALL, and WITH the connivance of the state, is sheer financial stupidity. I wonder how many free passes or set tours it cost to get such a misguided and irresponsible laws passed?
David Dabney on February 22, 2012 8:41 PM:
My impression of these subsidies here in the state of NM is that the have helped develop a whole section of middle class technical jobs, most of which are union, like electricians, camera operators and other 'below the line' credits.
Ours is a straight tax refund credit, as far as I know.
Gov't Mule on February 23, 2012 10:24 AM:
I live on the North Shore of Mass. and we have had a number of productions filmed in our region as of late. I think there is some evidence that at least on a local level, these shoots bring money to the LOCAL economy. It is debatable whether or not it is greater than the usual money that tourists spend in our area. For example, if a popular hotel is booked w/ movie production people and talent does that mean there is more business if the same hotel is booked w/ people NOT from Hollywood?
I would agree that credits as they are currently designed are too generous towards Hollywood. I would rather see the tax credits designed to bring lots of smaller, independent film projects than to see multinational studio corporations showered w/ largesse that they don't need in the first place.