Are Tax Breaks for Hollywood Really Necessary?

By Eric Boehm | PA Independent

HARRISBURG – An Associated Press article posted this morning at various Pennsylvania news outlets sings the praises of the state’s Film Tax Credit program and subtly encourages the state to ratchet up the current $60 million annual give-away to Hollywood.

Over the course of about 700 words, the story quotes three sources in support of the tax credit program– they make the usual arguments about how the tax credit lures production companies to Pennsylvania, offering residents of the Keystone State the chance to have a temporary job getting coffee for the “Best Boy” or “Key Grip” or any of those other production jobs that no one actually understands outside of Tinseltown.

Here’s how it works, and what the advocates say:

“The current incentive essentially offers a 25 percent tax credit to productions that spend 60 percent of their budget in Pennsylvania. Capped at $60 million, the program this year is helping to fund eight feature films, one documentary, eight TV episodes, a pair of TV series and one TV pilot.

The credit needs to be at least $100 million, said Pittsburgh Film Office director Dawn Keezer…

…She noted the state is vying against places like New York and Georgia, which offer 30 percent credits. And New York’s multiyear program — now at $420 million annually — extends through 2014.”

But the article lacks any source questioning the legitimacy of this $60 million tab – though Senate Majority Leader Dominic Pileggi, R-Chester, does make an appearance to point out that basic budgetary needs have to be met before the state can consider increasing the tax credit.

It shouldn’t have been that hard for the AP to find someone to debunk the tax credit program’s effectiveness – even groups that rarely agree on policy can find common ground in the evidence that these tax credits are a waste.

The Center on Budget and Policy Priorities, a liberal Washington D.C., think tank, published a lengthy piece in 2010 debunking many of the common arguments for film tax incentives.

Closer to home, the Commonwealth Foundation, a Harrisburg-based free market think tank, also has plenty of good information on how the film tax credit costs more than it is worth.

The Associated Press article does accidentally stumble onto a good point though – Keezer tells the news organization that the third installment in the recent Batman trilogy filmed in the Pittsburgh area, bringing with it “thousands” of jobs.

However, the article notes that “Batman: The Dark Knight Rises” did not get any tax credits from the state.

If blockbusters like that are going to film in Pennsylvania without a taxpayer-subsidized incentive, why did we spend $3.3 million to host the filming of “My Bloody Valentine” or $36 million for “The Last Airbender?”

Contact Boehm at Eric@PAIndependent.com and follow @PAIndependent on Twitter