Film Subsidies

Ryan Kearney reports on the questionable practice of offering tax incentives for movies to film in particular locations:

But if you live in D.C. proper, as I do, you might stop laughing when you learn that your District stewards gave $1.4 million in taxpayer dollars to How Do You Know, which filmed in Adams Morgan last year. That’s about one percent of the film’s budget — a pittance for Columbia Pictures, which produced the movie, but a significant sum to District agencies facing major budget cuts. D.C.’s film office would argue that the money was necessary to ensure that How Do You Know filmed here. Opponents would argue that the screenplay was set in D.C. — Wilson plays a Nats reliever, Rudd an executive facing securities fraud — so where else would they shoot?

I think that’s actually a fairly weak objection. Bones is set in Washington, DC but the producers manage to put it together with very few authentic DC location shots. This aggravates me to an extent, but doesn’t imperil the success of the show in any serious way.

The real question here is why would you think a target tax subsidy for the movie industry is a smart economic development strategy. Let’s say you start with a certain quantity of public services and a balanced budget. Your money’s coming in from property tax, sales tax, income tax, and a few licensing fees. Now it’s definitely true that a tax break for folks who film movies in your city might spur some additional business activity in your city. But you’ll have to pay for it with either higher taxes or else fewer services. Won’t the higher tax rates just offset the positive impact of the targeted tax break? And if you’re willing to live with fewer services in exchange for lower taxes, wouldn’t it be more beneficially to cut rates across the board?