For almost twenty years, Georgia has lured big-time Hollywood film studios with the promise of profitable tax breaks for filming within the state.
And here is a predictable plot twist: Handing out welfare to wildly profitable films—like Avengers: Endgame, which earned greater than $2 billion on the field workplace however however additionally certified for tax credit as a result of it was filmed in Georgia—hasn’t been an excellent deal for taxpayers.
A brand new audit of Georgia’s Movie Tax Credit score program discovered that the state “loses money” on this system. Some huge cash, really: about $160,000 for each job this system creates. Georgia is now spending about $1.3 billion yearly on this system, but it surely generates a return on funding of simply 19 cents per greenback, the auditors conclude.
“This program should be halted immediately,” J.C. Bradbury, an economics professor at Georgia’s Kennesaw State College and a longtime critic of presidency subsidy schemes, posted on X (previously Twitter). In a 2020 paper, Bradbury estimated that the state’s movie tax credit score program price about $110,000 per full-time job created and that each Georgia family was on the hook for about $230 in further taxes yearly due to this system’s existence.
Along with highlighting the tax credit score program’s prices, the brand new audit additionally means that the movie {industry} has inflated the supposed advantages of this system. Georgia’s movie tax credit score is chargeable for creating about 34,000 jobs yearly within the state, in accordance with the brand new audit, however that is nicely wanting the 59,700 annual job-creation determine {that a} latest industry-funded research claimed, reported Selection.
Created in 2005, Georgia’s subsidies for film and TV manufacturing are the largest such pot of money out there wherever within the nation. Manufacturing firms that spend a minimum of $500,000 within the state throughout a single yr are eligible for tax credit equal to twenty % of their in-state expenditures. There isn’t a cap on qualifying expenditures for manufacturing firms, and there’s no mixture cap for annual or lifetime tax credit, in accordance with the audit report.
There isn’t any doubt that Georgia’s program has influenced the place film and TV manufacturing takes place. The brand new audit concludes that this system has induced “substantial economic activity in Georgia,” however that is merely proof of the truth that lighting some huge cash on fireplace will ultimately produce some warmth. The underlying numbers recommend that Georgia’s subsidies are doing a poor job of producing financial progress or creating jobs.
It has been the identical story just about in every single place else, although many states have gotten clever to the movie tax credit score scheme. In 2009, 44 states backed film and TV manufacturing with some mixture of rebates, tax credit, and grants. As we speak, simply 22 states and Washington, D.C., provide these applications.
Although Georgia’s program has a protracted historical past of bipartisan assist, modifications may very well be coming. As Motive‘s Joe Lancaster reported earlier this yr, Lieutenant Gov. Burt Jones and Georgia Speaker of the Home Jon Burns (R–Newington) have pledged to undertake a radical overview of the state’s tax credit score applications, together with the movie tax credit score, with a watch towards “ensuring a significant return on investment for Georgia’s taxpayers.”
With this new audit in hand, Jones and Burns ought to do their greatest Thanos impressions and switch Georgia’s deeply flawed film welfare program to mud.