Film incentives a losing proposition for taxpayers
The prospect of a movie star eating at a local restaurant or a movie being filmed in your home town is appealing to most people. Yet it shouldn’t be funded by taxpayers.
Mississippi is one of the numerous states that offer taxpayer funded film incentives to Hollywood producers in an attempt to have movies shot in the Magnolia State.
There are two programs on the book. One is the Mississippi Investment Rebate, which offers a 25 percent rebate on purchases from state vendors and companies. The other is the Resident Payroll Rebate, which offers a 30 percent cash rebate on payroll paid to resident cast and crew members.
A third rebate, a 25 percent rebate on payroll paid to cast and crew members who are not Mississippi residents, expired two years ago. But lawmakers seem very interested in reviving it this year.
So, who could be against this? For one, taxpayers ought to be. Film incentives are a losing proposition. And that is according to the state’s own data.
A 2015 PEER Report shows taxpayers receive just 49 cents for every dollar invested in the program. That means that for every dollar the state gives to production companies, we see just 49 cents in return. If you or I were receiving that return on our personal investments, we would fire our financial advisor. Of course, no one spends his or her own money as carefully as the person to whom that money belongs.
An ironic, or perhaps sad, side note is that we are actually “doing better” than other states when it comes to film incentives. This includes our neighbors in Louisiana, who recover only 14 cents on the dollar. They also have one of the most generous programs in the country; it was unlimited until lawmakers capped it a couple years ago. Other reports show the Pelican State recovering 23 cents on the dollar, but either way it’s a terrible investment.
Beyond Mississippi and Louisiana, film incentives are a poor investment throughout the country. Numerous studies have been conducted, all providing sobering statistics for those worried about spending tax dollars wisely.
For every dollar spent, Connecticut receives just 7 cents in return, Michigan receives 11 cents, Massachusetts receives 13 cents, New Mexico receives 14 cents, North Carolina receives 19 cents, Ohio receives 21 cents, and Wisconsin receives 23 cents. We could go on.
Studies from numerous other states over the past decade show taxpayers losing wherever film incentives have been tried. That is the reason many of those states have scaled back or eliminated their programs. In 2009, all but six states offered some type of incentives for movie producers. Today, just 31 states still have programs on the books. So, while other states are cutting back, Mississippi lawmakers appear interested in pressing forward.
How do these states, which no longer offer incentives, try to attract movie producers?
Alaska, for example, repealed their program in 2015. But they advertise their lack of state sales or income tax. Similar story in Florida, who let their program expire in 2016. They do not levy a state income tax.
There are many reasons Mississippi is attractive for filming. It is the quintessential Southern state with historic squares along with beautiful antebellum mansions. There is the vast farmland of the Delta, the beaches of the Coast, and the numerous forests throughout the state. Mississippi has the lowest cost-of-living in the country and it is a right-to-work state with very competitive wages. We have plenty to sell.
One lawmaker recently called it “criminal” that the movie Free State of Jones, a movie about Mississippi, was not filmed in Mississippi. We lost out in the race-to-the-bottom bidding war with Louisiana. We should consider it criminal that lawmakers are so willing to part with our tax dollars in a losing endeavor.
Rather, our goal should be for Mississippi to have the most competitive business climate in the country. The tax breaks that a few chosen industries or companies receive should be made available to all.
When we do that we will remove the need for taxpayer funded incentives.
Brett Kittredge is the Director of Marketing and Communications for Mississippi Center for Public Policy, the state’s non-partisan, free-market think tank.