Louisiana Film Tax Credits: Selling Out to Hollywood

Louisiana Film Tax Credits: Selling Out to Hollywood

Posted by: Tim Mathis

A new report by the Center on Budget and Policy Priorities calls film tax credits “a Hollywood fantasy,” pointing out that they don’t live up to their fanciful economic promises. Louisiana is one of 43 states that has a tax incentive program—the Motion Picture Investor Tax Credit—for film companies. Productions with investments greater than $300,000 qualify for a 30 percent tax credit on in-state expenditures, and a 5 percent credit for payroll costs. Although the cost to the state varies year to year, the program cost taxpayers over $100 million in 2009. The average employment in the motion picture and sound industry last year was 3,023, meaning the state spent more than $33,000 on each position.

Film productions don’t create permanent jobs or generate income to offset the loss in state revenues. A 2005 report by the Legislative Fiscal Office estimates that the state government would only recover 16 to 18 percent of lost taxes. In the past five years, average annual employment in Louisiana’s film industry has slightly declined. Employment is highly unstable from month to month, telling us that most of the jobs are temporary and part-time. While films hire many people locally, most of the high paying jobs go to highly skilled individuals from out of state. Compared to film tax credits, Louisiana spends less on incentives for research and development, university research parks, and urban revitalization combined. In Louisiana’s current budget climate, where revenues are not sufficient to cover promised state services, every dollar that goes to Hollywood is a dollar that is lost to higher education, healthcare, economic development, and infrastructure such as roads and bridges.