Stop the Hollywood handouts
June 17, 2024

Stop the Hollywood handouts

“We’re not even in the game,” Michigan State Senator Dayna Polehanki said recently, lamenting that few Hollywood studios are filming movies in her state, which eliminated its film production subsidies in 2015.

The senator could learn something from classic movies. As the 1983 nerd-thriller WarGames noted, sometimes the only winning move is not to play.

For years, movie producers have played states against each other and reaped billions in taxpayer money. The smart strategy for state lawmakers is to stop playing.

When states compete for film production with taxpayer dollars, the only way for lawmakers to raise their game is to pay ever-greater chunks of Hollywood’s expenses. This produces losses for the economy because it doesn’t create more movies—you’ve got to already have a movie to shop around before applying for film subsidies—but it does increase social costs.

That’s not to say there aren’t winners. Movie producers clearly win when they get taxpayers to pay 30 percent of their expenses, as they do in Georgia. The people who sell things to movie producers love it when their sales go up. It’s why some towns in Georgia are happy when directors come to town.

Elected officials are drawn to the one-sided accounting of film subsidies. Promote the benefits, ignore the costs. Turn your head and squint your eyes, and maybe it looks like the state comes out ahead.

But a clear-eyed assessment demonstrates that states lose. Georgia auditors found that the tax revenue the state receives from the subsidized film industry amounts to less than a third of what it spends on the subsidies—even when counting the tax revenue from the people who sell to the people who sell to film producers. New York auditors found similar losses in their state.

Legislators can convince film producers to shoot in their state, but only at a cost to their treasury. States looking to land film productions have to spend more to win more.

Michigan’s experience with its 42 percent production subsidy (the highest in the nation at that time) was especially bitter. Lawmakers spent $500 million chasing films from 2008 to 2015. There is little to show for it outside of credits in a few good movies and a lot of bad ones. Quality, after all, doesn’t matter to economic impact. Bad movie money spends the same, and applications aren’t rejected for the plot.

That $500 million could have been spent on more socially productive uses. The state still doesn’t fix its roads as fast as they fall apart. That money could have filled a lot of potholes.

Georgia now spends more on films than it does on state and local parks, according to the Census Bureau. Most Georgians would benefit more from nicer trails and playgrounds than from credits in movies.

Subsidizing Hollywood production also saps money that could otherwise be used for social welfare programs. Instead of going to help people on Medicaid, these tax dollars go to movie producers.

The lost opportunities are difficult for lawmakers to grasp. They want to show that they’re doing something about the economy. Few things are as showy as movies and TV. People notice when famous actors show up in their grocery stores.

But anteing up to win more productions is a losing play, and the game is rigged against states that offer subsidies. The state treasury never comes out ahead, which means less money for things that governments can and should accomplish.

If states get rid of their film subsidies, people will keep producing movies. They’ll just produce them in places that make sense, rather than trying to make Detroit look like Minneapolis, swapping in Boston for Detroit, or casting Vancouver as New York and every other city. These location choices only get made because elected officials hand out more money to producers.

It’s better for state lawmakers to stop bidding on movies altogether. All lawmakers need to do is to tell Hollywood no when it asks for taxpayer money.

Editor’s note: This piece by the Mackinac Center for Public Policy originally appeared in Newsweek.

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