The Center on Budget and Policy Priorities weighed in last fall with two studies questioning the value of business tax credits and corporate income tax cuts. The center claims film tax credits reward companies for what they would have done anyway, filmed in your state. Further, the credits do little to create jobs for in-state residents because the film companies import skilled workers from Los Angeles, New York City, and other movie capitals.
Is the Center right? No, according to a recent article on New Mexico’s film tax credit. The credit reimburses movie makers for some of the state and local taxes they pay, but also increases state taxes on capital expenditures and film tourism, the article stated, citing an earlier Ernst & Young report on the state’s film tax credit. The article describe several features of the credit that could account for its economic impact (Source: “Film Tax Credit Incentives: A Success in New Mexico,” State Tax Notes, September 13, 2010, available in Legislative Library).
Is that the last word? Hardly; the same Tax Foundation that ranked Connecticut 47th among the states in business tax climate claims film tax credits “often encourage individuals to gain skills that are only employable as long as politicians enact ever-larger subsidies for the film industry.”
What are we supposed to make of this debate, if even the experts can’t agree on the value of film tax credits? Maybe when we read these studies, we need to read beyond the executive summaries and apply the old adage, “The devil’s in the details.” At least that’s the message in David H. Freedman’s new book, Wrong: Why Experts Keep Failing Us—And How to Know When Not to Trust Them (2010).
