“Bull Durham,” “Last of the Mohicans,” “Dirty Dancing,”
and most other beloved “North Carolina films” were produced without film incentives. They were made years and
years before state officials ever thought the industry required
North Carolina is an attractive location for many
reasons. It offers a diverse climate, rural to urban landscapes,
mountainous to coastal terrain, a cornucopia of settings, a
good production infrastructure, and it’s a right-to-work state
with competitive wages and cost-of-living expenses.
- The idea behind film incentives is simply this: Lower
costs of doing business are good for business.
- The problem is, film incentives are special treatment for
just one kind of business. Other businesses don’t benefit;
in fact, they effectively pay higher tax rates subsidizing
the favored industry.
- Unlike other economic incentive programs, film incentives
don’t require recipients to earn them over time by
fulfilling specific job-creation targets or other long-term
- Those who benefit from film productions coming to
North Carolina because of the incentives include state and
local film offices, local studios, film crew workers, restaurants,
hotels, hairdressers, carpenters, lumber yards, etc
- The incentives’ biggest beneficiaries are film production
companies. And that is true even if they don’t produce in
- North Carolina’s incentives “bid” pressures other states to
increase theirs, and vice versa
- This aspect of film incentives is what The Economist called
“a stupid trend” and a “beggar-thy-neighbor trade war.”
- It means there can be no “right” amount of incentives.
Competing incentives packages offered by other states —
not to mention many other countries! — are in constant
- The solution more and more states are realizing is to get
out of the losing game entirely. This game is not that old,
- From 2002 to 2009, the number of states with film
incentives programs grew from four all the way to 44. By
2009, only six states were not offering film incentives.
- North Carolina started offering film incentives in 2005.
- Meanwhile, many state governments studied the returns
on their film incentives and found they were getting only
a handful of pennies per dollar revenue spent.
- By 2016, then, about one-third (16) of states were not
offering film incentives.
- In North Carolina, the Commerce Department in 2014
found a net “negative budgetary impact” of the film
incentives program, with the state getting a return of justover 19 cents per dollar of tax credit given.
- At that time the state offered a refundable income tax
credit of 25 percent of qualifying production expenses
with the maximum credit of $20 million, and there was
no annual spending cap on the program.
- After some tinkering, now North Carolina’s film production
incentive is a grant program. It offers a rebate of
up to 25 percent of qualifying expenses with differing
maximum credits for TV series ($9 million), feature films
($5 million), and commercials ($250,000). The program
has an annual cap of $30 million.
- Rather than lowering the costs of doing business just
for specially favored industries through targeted incentives,
state leaders should use corporate income tax cuts
and regulatory reforms to lower business costs across the
- Such policies have solid empirical backing. They can be
considered all-comers incentives, good for untold numbers
of business ventures across the state and, therefore,
the state’s economic growth.
- Positive economic returns from the historic tax and regulatory
reforms of 2013 underscore this broad incentive
- A vibrant economy and lower costs of doing business can
supplement the state’s amenities to film productions as
well as to hosts of other, overlooked business endeavors.
1. End the film production grant program.
2. Let across-the-board corporate and income tax cuts and
regulatory reforms add to the state’s many other amenities
to attract productions.