No Matter Who Wins at the Oscars, Taxpayers Lose on Film Subsidies
Sunday night brings the 89th Academy Awards, and many are wondering what film will take home the Oscar for Best Picture. No matter what film wins, one group of people should be thanked during the acceptance speech—taxpayers. Film is a heavily subsidized industry, and the majority of states have tax incentive programs that lower the cost of production. These tax credits are determined by production costs, not profits, and many credits are transferrable or refundable. When a film’s tax liabilities are below its allotted refundable credits, taxpayers end up directly paying film companies the difference.
New York’s fully-refundable 30 percent film tax credit is the most generous in the nation, with an annual limit of $420 million. Brooklyn and Bridge of Spies, two of this year’s nominees, were filmed in New York, and their budgets were $12 million and $40 million, respectively. With the hundreds of millions of dollars that taxpayers gift the film industry each year, perhaps it is time for the Academy Awards to create an Oscar for Best Tax Break. If nothing else, taxpayers at least deserve a shout-out during Sunday’s award ceremony.
States are starting to realize that the economic benefits of film tax credits are pure fantasy, like some movie plots. In 2012, 40 states offered tax incentives, at a total cost of $1.4 billion, but since then some states have decided that maintaining roads, funding schools, staffing police departments, and letting residents keep more income are better uses of funds. Since last year’s Oscars, Alaska, Michigan, and Illinois all ended their film tax credit programs.