Policy Position

Film Incentives

in Budget, Taxation, and the Economy
Featured Image


“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
government help.
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.

Key Facts

  • 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.
  • 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.




Donate Today

About John Locke Foundation

We are North Carolina’s Most Trusted and Influential Source of Common Sense. The John Locke Foundation was created in 1990 as an independent, nonprofit think tank that would work “for truth, for freedom, and for the future of North Carolina.” The Foundation is named for John Locke (1632-1704), an English philosopher whose writings inspired Thomas Jefferson and the other Founders.

The John Locke Foundation is a 501(c)(3) research institute and is funded solely from voluntary contributions from individuals, corporations, and charitable foundations.