Before North Carolina?s General Assembly considers (it?s the second item here) expanding its targeted tax breaks for film and TV productions, perhaps lawmakers would benefit from reading an article from the latest Bloomberg Businessweek.
Tax analysts say it’s about time Hollywood took a back seat to more pressing needs. “We are starting to stem the tide of state government pandering to the film industry,” says Bill Ahern, policy director for the Tax Foundation, which advocates lower taxes.
The credits also have aroused criticism because some states make them refundable. That means a production owing little or no state taxes still gets a check for the portion of the tax breaks it didn’t need. In Michigan and 13 other states the credits are also transferable and can be sold in a secondary market to companies looking to cut their own taxes. Often the transactions are secret. A Connecticut nonprofit’s Freedom of Information Act request forced the state to reveal that Bank of America, Wachovia, Hershey, Comcast, Provident Life & Casualty Insurance, and Colonial Life & Accident Insurance had bought credits from filmmakers to lower their tax bills. Provident, Colonial, and Bank of America confirmed that they purchased the tax credits and declined to comment further. The other three declined to comment.
“Outrageous,” says Robert Tannenwald, a former vice-president at the Boston Federal Reserve Bank and now a senior fellow at the Center on Budget and Policy Priorities. “There’s no reason for a government to finance a financial institution in such a circuitous way.”
Still not convinced film incentives are a bad idea? Perhaps Joe Coletti?s research on the topic will convince you.
