State analyst echoes Tax Foundation critique of film production incentives

By Patrick B. McGuigan

A new study from the Tax Foundation questions the effectiveness of incentives provided to encourage motion picture filming and/or production around the country. A total of 44 states, the District of Columbia and Puerto Rico offer significant movie production incentives, the foundation says, but limits on such programs could be coming.

David Blatt of Oklahoma Policy Institute (OPI) commented on the film tax credit issue in an interview with CapitolBeatOK. He said, “In general the report points to the fact that a lot of tax credit programs are simply not well evaluated. Many of them are not reaching their professed goals in an efficient manner.” Blatt said that while he was not sure all the problems found in the Tax Foundation analysis are duplicated in Oklahoma, he hopes legislators will carefully examine the effectiveness of such programs here.
The report, issued Jan. 14 in Washington, D.C., is “Movie Production Incentives: Blockbuster Support for Lackluster Policy.” Listed as Tax Foundation Special Report, No. 173, it is available online at

William Luther, an adjunct scholar at the Tax Foundation and author of the report, said in a press release, “Motion picture incentives are often touted as ‘job-creating’ programs, but they create mostly temporary positions with limited upward mobility. The only thing these incentives create is the need for ongoing credits and subsidies. As other states sweeten their incentives, productions move on.”

Only five states offered such incentives in 2002. Today, of the 44 involved in some way, the foundation says “28 states and Puerto Rico offer tax credits for film production — credits that are refundable in 15 of those states. Eighteen states offer direct cash rebates to production companies, and Texas, Tennessee and the District of Columbia offer grants to filmmakers.”
Oklahoma Policy Institute’s Blatt told CapitolBeatOK, “Certainly very serious concerns have been raised about the wisdom and effectiveness of the programs in Iowa and Kansas. I have a pretty strong suspicion some of the same problems have existed here as in those other states.”
A Tax Foundation summary of Luther’s report said: “In addition to tax credits, cash rebates and grants, film production companies receive other preferential tax treatment: 30 state offer sales tax exemptions, and six states offer fee-free locations for the use of police officers to stop traffic.”
“Some states are suspending their MPI [movie production incentive] programs due to budget pressures and revelations of mismanagement. Kansas has suspended its film tax credit program, and an Iowa panel appointed by Gov. Chet Culver after findings of program abuse [recently] recommended eliminating the state’s film tax credit.”

Blatt reflected, “The question that does not get asked often enough is whether or not these programs are cost efficient and if they have a real economic benefit or not. Often with incentive and credit programs you wind up having only companies who don’t really need the benefits being the only ones who can get these deals at taxpayer expense.”
Blatt concluded, “I hope the report will have the effect of forcing legislators and others in government to look very carefully at what actually works and to be very disciplined before using scarce resources in such a manner. Obviously in the terribly difficult circumstances we face, everything the government does is under close scrutiny. I think that kind of scrutiny should be given to the state’s film incentives program.“
Strong advocates for MPIs and other incentives have included governors in Florida, Michigan, New Mexico, Oregon, Ohio and Texas, while rare critics have included Mitch Daniels of Indiana, and, most recently, the governors of Iowa and Rhode Island.

A non-partisan, nonprofit organization, the Tax Foundation has monitored and reported on fiscal policy at all levels of American government since 1937.