At the end of next year, North Carolina’s refundable film tax credit is scheduled to expire. The question is, will legislators follow the plan, or will they give in to pressure from industry special interests? JLF’s Jon Sanders writes here about why the credit should end.
2. Film incentives don’t work like other incentives.
As Brent Lane of the Kenan Institute at the University of North Carolina at Chapel Hill pointed out, the refundability provision is unique among the state’s economic incentives. “We’re paying out a lot of cash directly to the film industry, rather than — as we do in all our other tax credits — forcing the company to gradually use their tax credit over future years,” Lane told WFAE.Also unlike other economic incentive programs, film credits don’t require specific numbers of jobs created or other long-term promises from the recipients.
3. Film incentives don’t work, like other incentives.
As this newsletter has previously discussed, “Studies in state after state afterstate after state (including North Carolina) find that film tax credits are net money losers for the host state.” Which puts them in the tradition of other economic incentives programs.Based on the questionable assumption that state policymakers are more capable than investors taking risks with their own capital to pick the best business ventures, economic incentives programs tend to be money losers on net, though they have positive effects on the favored industry.
