Cut through the film tax credit fiction
By Colin McNickle
Published: Saturday, April 20, 2013, 9:00 p.m.
There was an interesting cluster cluck in Harrisburg Wednesday last — a joint hearing by the Senate and House Democratic Policy committees on Pennsylvania's Film Tax Credit Program.
The credit “is a glowing example” of a legislative success story that has led to jobs and economic development, said state Sen. Lisa Boscola, D-Northampton, in a news release after the session. “When we help business expand, hire more workers and invest in our economy, many of our funding and budget challenges will take care of themselves,” she wrote.
Would that it were true.
The tax credit was adopted in 2007. To be eligible, motion picture or television projects must spend 60 percent of their respective shoots' budgets in Pennsylvania. Only then is a 25 percent tax credit applied to qualifying production expenditures. Proponents claim the credit is directly responsible for the creation of 18,000 jobs and $739 million in wages. They also claim “economic activity” of nearly $2 billion.
Supporters say the current annual allotment of $60 million is not enough, evidenced by the fact that it's exhausted quickly and leaves too many productions credit-less and, thus, headed to other states with larger incentives.
Pennsylvania's cap is “damaging” and “unrealistic,” union types argue; the Keystone State must create “a competitive tax incentive” program to keep production here, they add.
Never mind the growing scholarly research that suggests the “benefits” of the tax credit are as fictional as the Hollywood efforts they subsidize. Worse, most of the reportage on the topic is cheerleading that accepts proponents' win-win claims as gospel.
One of the freshest studies to question the benefits of the film tax credit came last fall from University of Pittsburgh researcher Ashley W. Edwards. “While it is tempting to say that Pennsylvania can and should try to create economic diversity by developing and supporting a film industry until it can sustain itself without a tax credit program, a closer examination of the policy reveals three major problems,” she writes:
• It's difficult to predict the productions' actions if no tax incentive is available; many films and programs have been, are and would be produced without it.
• The “race” against other states' incentive programs to attract productions creates a never-ending battle; it's an arms race with your wallet — a “race to the bottom.”
• The film tax credit “generates a net loss of tax revenue for the state and does not create the purported number of jobs”; many are low-skilled or “shifted,” temporary and with no upward mobility; industry-generated studies claiming otherwise are biased.
Ms. Edwards also reminds that the film tax credit is transferable — “the production company may sell its remaining tax credits to other Pennsylvania taxpayers,” she reminds. And in fiscal 2011-12, 98 percent ($64.3 million worth) of film tax credits “were either sold or transferred to another entity, with just $1.4 million used by the initial tax credit recipient to reduce its Pennsylvania tax liability.”
Taxpayer wealth is transferred to “affluent third parties,” notes Edwards, who also exposes a number of transparency failures and accounting tricks by the king of such nonsense, the Pennsylvania Department of Community and Economic Development.
“The Legislature must look beyond the local media and their starry-eyed constituents and carry out more balanced studies to study the real costs and benefits of the film tax credit,” Edwards concludes.
Indeed, it's time to expose this cluster cluck once and for all.
Colin McNickle is Trib Total Media's director of editorial pages (412-320-7836 or firstname.lastname@example.org).
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Starkey: Steelers know when to say goodbye
- Analysis: Kesler remains on Penguins’ radar as Shero looks bring back ‘Big 3’ formula
- Pirates’ big risk with pitch-heavy draft focus might soon pay off
- Ex-Colts executive Polian: Approach free agency with caution
- With so many needs, Steelers can ill afford to miss in draft
- Penguins GM Shero’s deadline deals: Addition by subtraction
- Pitt rallies in final seconds of regulation en route to OT win at Clemson
- Obama losing close adviser to end 9 years of service
- IUP students have raucous early St. Patrick’s Day celebration
- Greensburg bishop’s time at helm draws to a close
- Steelers defense doesn’t make the grade in 2013 review