Superhero Subsidies

Politicians eager to see their cities destroyed offer giveaways to filmmakers.

This summer’s most colossal box-office winner was writer-director Joss Whedon’s big-budget, big-screen adaptation of the classic Marvel superhero comic The Avengers. The movie, a sprawling crossover featuring Captain America, Iron Man, Thor, the Hulk, and assorted members of the fictional global security force S.H.I.E.L.D., had raked in more than $622 million at the domestic box office as of September, nearly three times what it reportedly cost to make. 

Much of that budget went to creating the film’s epic superhero stunts and special effects, including a knock-down, drag-out 30-minute finale in which the heroes face off against a horde of alien invaders on a viaduct in downtown Manhattan. One catch: Almost none of the finale was shot on the streets of New York. Instead, the filmmakers relied on a combination of alternative locations. For some of the character close-ups, they recreated the signature Big Apple bridgeway in front of a giant green screen inside an abandoned train station in Albuquerque. For the bulk of the street scenes, they relocated to a city not commonly mistaken for America’s most prominent metropolis: Cleveland. 

Cleveland, a struggling Midwestern city with a population that has steadily declined from more than 500,000 in 1990 to 393,000 in 2011, got the once-in-a-lifetime chance to act as a body double for Manhattan, central borough of the city that never sleeps, population 8.24 million and rising. But not without a makeover: The movie’s production designers imported New York taxis, building facades, and street signs—along with a healthy supply of premade rubble—in order to replicate the look and feel of an invaded midtown Manhattan. 

Why Cleveland? The decision to film in the Forest City can be explained in two words: tax subsidies. The State of Ohio Film Office offers moviemakers large and small a tax break amounting to between 25 percent and 35 percent of wages and other spending doled out within the state. Because the credit is refundable, it’s more than just a break on taxes the production might have paid. It’s a payment—essentially a thinly disguised subsidy—doled out to silver-screen types who do business in the state. 

That’s a good thing, according to Ivan Schwarz, executive director of the Greater Cleveland Film Commission. “Let me put it this way,” Schwarz said to Cleveland.com last summer. “I think everyone in Cleveland is going to know The Avengers is in town.” 

They’ll certainly be paying for it. All told, The Avengers received credits worth about $6.7 million, according to the state’s Department of Development. 

The Avengers isn’t the first superhero flick to blow up Cleveland instead of New York. The 2007 trilogy capper Spider-Man 3 used the city’s theater district to film several explosive street scenes. Nor are superheroes the only beneficiaries. George Clooney’s political thriller The Ides of March also cashed in on Ohio’s credit last year. (Clooney’s gang managed to double dip, picking up subsidies from Michigan as well.)

Lawmakers in the Buckeye State and elsewhere tout the tax credit as a way to create jobs, bring national attention to flyover cities, and eventually create a thriving film production industry. And they’ve doubled down on the money they’re willing to dole out, increasing the funds available for the credit from $10 million to $20 million this year. During the summer, Rep. Mike Dovilla, a Republican state representative who helped sponsor legislation to expand the credit, bragged in a campaign flyer that “big ideas like expanding the Ohio Motion Picture Tax Credit, which helped bring films like The Avengers to Cleveland, have helped make our state No. 1 in the Midwest for job creation.” 

But state-based film tax credits are a big idea without a big payoff. Currently 43 states offer the subsidies, which are worth a total of $1.5 billion. Multiple government reviews of those credits in states such as Michigan and Massachusetts have concluded that the subsidies typically fail to pay for themselves. Instead, states end up losing money paying for film productions that in many cases would have happened with or without the tax incentives. 

The Avengers’ main competition at the summer box office proves the point. The Dark Knight Rises, rival comic publisher DC’s Batman film, chose to cast Pittsburgh as Gotham, the Caped Crusader’s fictional home city. And although Pennsylvania offers a film tax credit, the production didn’t use it. The Avengers may be the World’s Mightiest Heroes, but the Dark Knight managed to rise without any help from taxpayers.  

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  • Randian||

    Am I alone in thinking The Avengers was kinda crap?

  • ||

    It was fine as superhero movies go; it's just that superhero movies are utterly passe and boring as hell at this point. Really, I just don't care any more. However, I will take more of Cobie Smulders and Scarlett Johansson in catsuits. Yes, that will do nicely.

  • CE||

    I'll even volunteer to be interrogated by them in the sequel. Or just for practice.

  • Tulpa (LAOL-PA)||

    I would tend to agree. At least until we get a Frisky Dingo movie.

  • DJF||

    This is why Hollywood keeps on supporting tax increases. Its not worth getting tax breaks if taxes are low and how will states be able to subsidize the movie industry if they don't have high taxes?

  • Tim||

    Cleveland as New York? WTF? I suppose next you'll be telling me that aircraft carriers can't fly.

  • Delroy||

    I believe they filmed some of the Avengers aircraft carrier scenes in Ohio as well. They did a casting call at Wright-Patterson Air Force Base (near Dayton) to get real military members to play extras for the carrier scenes that I think they filmed in a warehouse facility in Wilmington.

  • Delroy||

    Oh, and fuck! As an OH resident, I'm annoyed that the state is paying for movie-making.

  • Zuul mothafucka Zuul||

    Goddammit the squirrels keep on eating my comments!

  • Zuul mothafucka Zuul||

    Ok, one last try. It seems the consensus around here that taxbreaks are unlibertarian. But if it is wrong to give tax breaks to the movie industry then why is it permissable to give tax breaks to the Church?

  • $park¥||

    Simple, it isn't.

  • ||

    Satanism also pushes for the elimination of non-profit/tax-exempt status. Why do you love Satan so much, Sparky?

  • $park¥||

    Satan is my kinda guy. He got kicked out of Heaven by the limp-dicks there just because he wanted to have a little fun.

  • LTC(ret) John||

    I would nae be too happy with Satan - if he had kept his yap shut, we'd never die and be walking around naked in a paradise.... Wait, I just thought of middle aged German tourists on a Mediterranean beach... *shudder*

  • Tulpa (LAOL-PA)||

    I thought that was Santa. He's an alien from Polaris, right?

  • CE||

    No consensus with me. Tax loopholes = remaining freedoms. The more tax breaks the better.

  • Tulpa (LAOL-PA)||

    Problem is, the option of giving tax breaks to favored individuals/groups makes it easier to raise the general tax rates.

  • Bobarian||

    taxbreaks are not unlibertarian; taxes are unlibertarian!

  • Tulpa (LAOL-PA)||

    Because in theory, the church doesn't make money.

    If it were up to me, there would be tight and ruthlessly enforced restrictions on how much tax exempt entities could pay their employees and contractors.

  • Fist of Etiquette||

    Because the credit is refundable...

    So in this case the credits were larger than the tax burdens? Without the $6.7 million in credits, what was the production to pay in taxes? Fact checkers, assemble!

  • Rasilio||

    This is what I was thinking.

    With as much money as The Avengers made I find it hard to believe that the credit exceeded their tax liability in Ohio

  • adrian||

    I always smile when people start to figure this one out on there own. The term tax credits is totally misleading. These incentives represent cash. It is literally that simple. Production companies almost never owe a single cent of taxes. The Avengers was produced Disney/Marvel, but to make the actual film, a new temporary production company is formed, typically an LLC, is the business entity that manages the finances of making the film itself. On paper, the LLC spends its entire existence spending money to make the film. None of the profits go to the LLC, studio. Marvel and Disney pay taxes in California, not Ohio or New Mexico (the other state it shot in for a $22 million cash handout.

    So, how much was refunded for cash? Probably the entire $6.7 million. Thanks for the free money, we don't have a tax liability because we only lost money to make the film.

  • adrian||

    In case you need more than just my word, here is a film incentive 411 post that will make your eyes pop out: http://www.stop-runaway-produc.....ith-taxes/

  • Citizen Nothing||

    I can't blame Whedon. I, too, only go to Cleveland when I'm being paid to do so.

  • Citizen Nothing||

    And I also get a city income tax rebate from Columbus for the days I spend in Cleveland (and anywhere else that's not C'Bus). Sweet.
    Of course, I have to pay C'bus income tax to begin with, even though I do not live in the city, nor can I vote on the tax.

    I also believe that, technically, Cleveland could try to get income tax from me for the couple of days a year I spend there. Come to think of it, I don't go to Cleveland at all, but somewhere in unincorporated Lorain County. Yeah. Yeah. That's it.

  • Tman||

    I could be wrong about this, and dear god I hope I'm not, but Tennessee has been able to keep in state the production business for the ABC drama "Nashville" without any tax subsidies as far as I'm aware.

    I have a bunch of friends who work on the set and everyone was worried that they would take production back to LA if they got picked up again for another season. They got picked up but production is staying in Tennessee. I'm curious if this is simply because of how much cheaper it is to film here than California even WITHOUT subsidies. I could be totally wrong though.

  • Bardas Phocas||

    Could be the cheapness or it could be that the producer bought a house in the area. My short time working the film and tv production taught me that they do stuff for just random reasons.

  • gaoxiaen||

    Or maybe because Nahville is Nashville.

  • gaoxiaen||

    *Nashville is Nashville

  • CE||

    Wait... is Peter Suderman (and Reason?) opposed to tax breaks to attract business? As a libertarian, I don't see any problem with cutting taxes to attract a movie project. Is he opposed to enterprise zones too? Did he think Hong Kong was too free market?

  • Tulpa (LAOL-PA)||

    If your tax rates are high enough that businesses will stay away unless you cut them, you should cut them for everyone.

  • Fluhdoten1||

    how can a libertarian promote unequal application of taxation?

    Or targeted taxation?

    Having govt single ppl out for different treatment is the road to hell.

    This is a different concept than low taxation. Its govt singling out citizens and dealing with them on personal level. Treating them special.

    As a libertarian, you want that?

  • CE||

    And although Pennsylvania offers a film tax credit, the production didn’t use it.

    Sounds like an expensive mistake. Why throw money away to a state government when you don't have to?

  • Tulpa (LAOL-PA)||

    Probably to make up for turning Pittsburgh into an unnavigable disaster zone two summers ago.

    I did see a couple of guys with AR-15s slung over their shoulders walking down Forbes Ave during the production. Not sure if they were affiliated with the movie or just open carry advocates with Bain-sized balls.

  • adrian||

    The production company never incurs state tax liabilities. On paper, they only lose money because they are paying to make the film. Profits come later and flow to the parent corporation, not the temporary llc prod. co. Batman could not get the Penn credit because it did not qualify. Penn. requires 60% of the budget to be spent there. Batman was only there for a short time and spend many more months in other places. If they could have gotten it, they would have. Even though they would not have a tax liability, film tax credits represent cash because states make them fully refundable or transferable (sell them to someone who owes taxes). They are not tax credits, they are cash handouts.

  • ||

    I really liked the Avengers movie. Now I feel sort of dirty.

  • zandooo||

    Sounds like a plan to me dude.

    www.Anon-Day.tk

  • jili5||

    There is a State of Ohio Film Office?? What next a State of Ohio Toilet Paper Office, and a State of Ohio Cream Cheese Office. What taxpayers ever wanted a film office sucking up their money?

  • joey89924||

    why is it permissable to give tax breaks to the Church?

    http://www.hqew.net/product-da.....Sheet.html

  • cinsel chat||

    good thanks sohbet
    cinsel sohbet

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