My research brief today looks at the growing trend among states to get out of film incentives, which they’re finding to be net money losers. It also highlights the solution that’s already implied by the urge to provide special tax cuts to the favored industry (in this case, film productions): cut taxes across the board.

I call it the “All-Comers Economic Incentive”:

Is there a way to make it even more affordable for film companies to do business in North Carolina without being unfair to other taxpayers? Especially businesses who are already here and already creating jobs and economic benefits for North Carolinians? Yes, there is, and in fact, state leaders are already doing it.

By giving tax cuts to all industries rather than just this one or that one, North Carolina has had brisk economic growth, outpacing national and regional averages. It’s created an environment where people can produce economic development, and they’ve responded.

We’ve also had four consecutive years of budget surpluses [note: it’s now five]. We’re considered a national model for tax reform.

I see signs of this principle at work in the National Conference on State Legislatures’ list of states with and without programs to incentivize film productions. Four non-incentives states are shown to offer tax breaks without favoritism:

  • Delaware “does not levy a sales tax.”
  • Florida “does not levy a state income tax.”
  • New Hampshire “has no sales and use, or broad base personal income taxes.”
  • South Dakota has “no corporate or personal income tax.”

With our recent tax reforms, North Carolina could certainly talk up its favorable tax climate overall. That is why our Policy Position on film grants counsels ending the film production grant program and letting across-the board corporate and income tax cuts and regulatory reforms add to the state’s many other amenities to attract productions.