The Curious Case of Lousiana Film Subsidies

Nick Gillespie | October 13, 2008

One of the biggest bills has come due in Louisiana, where residents are financing a hefty share of Brad Pitt's next movie: $27,117,737, which the producers will receive by cashing or selling off valuable tax credits.

Louisiana, one of the most assertive players in the subsidy game, wound up covering $27 million of the nearly $167 million budget of Pitt's "The Curious Case of Benjamin Button"—the state's biggest movie payout to date—when producers for Paramount Pictures and Warner Bros. qualified the movie under an incentive that has since been tightened....

Until two years ago, Louisiana's program offered a 15 percent credit for virtually the entire budget of a qualified film. Mark Smith, who oversaw the program, pleaded guilty last year to taking $67,500 in bribes to inflate budgets for a company that authorities did not name.

In case you're wondering, there's no evidence that such plans, on whatever scale, actually create jobs (duh).

"There's no evidence yet that this is a particularly efficient or effective way to create jobs," said Noah Berger, executive director of the Massachusetts Budget and Policy Center.

The nonprofit center reviews budget and tax policies in Massachusetts, which is spending about $60 million a year on producer credits. A recent study by the center found that the state's film credit, at 25 percent, is five times what is offered to those who build in designated economic opportunity areas and more than eight times the state's standard investment tax credit.

More here.

Do subsidies really swing that much business? Or are they a waste of tax money? reason has answers dammit.

Comments

|10.13.08 @ 10:09AM|#

$27,117,737

Does Louisiana even *have* that much money?

TallDave|10.13.08 @ 10:10AM|#

In case you're wondering, there's no evidence that such plans, on whatever scale, actually create jobs (duh).

But it does give us an excuse to raise taxes on those evil productive rich people and distribute their ill-gotten wealth to those shining beacons of morality in the film industry.

And higher taxes are patriotic. You're not unpatriotic, are you?

|10.13.08 @ 10:45AM|#

Yea, but we got us some real Hollywood celebrities to come down here. I thought Reason was bigtime into Hollywood and the cult of celibrity.

|10.13.08 @ 10:49AM|#

I could see an argument that getting your state in movies can be good advertising for your state as a place to live, visit or do business, so that even if you're producing hardly any jobs in the film industry you are getting something for your money. I sort of doubt it's worth it, but that's something you have to look at when you're calculating the return on Louisiana's investment.

|10.13.08 @ 10:49AM|#

In Michigan, our idea bereft governor has pushed and passed something similar.

I believe there is a good friggin' reason that the film industry located in Southern California that has absolutely nothing to do with tax breaks. My theory is that 330 days a year of weather coducive to outdoor filming has a lot whole to do with it.

Dumbasses.

|10.13.08 @ 10:59AM|#

They need to build a stadium movie studio; with one of those cool retactable roofs. That'll bring 'em.

nebby|10.13.08 @ 11:00AM|#

Say what you want about the wisdom of these tax breaks, but they do influence where productions head. The Texas film business has suffered a major blow to its film industry because the subsidies in La. and elsewhere draw off so many productions. Austin had developed a healthy crew of film professionals that could stay employed year round before the La subsidies ramped up. Now they are barely hanging on.

|10.13.08 @ 11:01AM|#

I just know that I moved to New Orleans after seeing Angel Heart.

|10.13.08 @ 11:03AM|#

Say what you want about the wisdom of these tax breaks, but they do influence where productions head

Vancouver is kicking LA's ass because of these. So many TV shows are filmed in Vancouver, it's ridiculous. However, this only worked because enough productions moved there. Getting a trickle of productions somewhere for a lot of subsidies isn't worth it; you have to become an alternate Hollywood.

|10.13.08 @ 11:08AM|#

Brad Pitt's latest movie: Homeless Dad.

"I just want my kids back!"

Vancouver is kicking LA's ass because of these.

There's also the beautiful scenery, classic city skyline, and surfeit of beautiful people. But I'm sure Louisiana has all those things, right?

|10.13.08 @ 11:19AM|#

There's also the beautiful scenery, classic city skyline, and surfeit of beautiful people

But is the third one a result of being Hollywood North, or the cause for being Hollywood North? ;-)

Derrick|10.13.08 @ 11:22AM|#

Say what you want about the wisdom of these tax breaks, but they do influence where productions head.

It's probably true that the subsidies do draw filmmakers into an area, but I suspect the cost to the citizens is greater than any benefit. If the money were left in the hands of those who earned it, they'd invest it, donate it to charity, use it to start businesses, use it to buy goods and services, etc.

|10.13.08 @ 11:31AM|#

I think the original impetus for Vancouver's success in luring television shows was the cheap C$.

Jay|10.13.08 @ 11:40AM|#

Corruption and Louisiana go together like peas and carrots (my apologies to Forrest Gump).

BakedPenguin|10.13.08 @ 11:41AM|#

P Brooks - IIRC, there were also some different tax laws - what could be expensed, etc. - that made Canada a much cheaper place to film.

Dilletante|10.13.08 @ 11:47AM|#

So leftists think tax cuts for the rich are ok, as long as they're the rich getting the cut.

|10.13.08 @ 11:50AM|#

Subsidies to make Brad Pitt fat?! I definetly oppose!!... Ah, wait, that is not what this is about?... never mind.

|10.13.08 @ 12:19PM|#

I thought Reason readers were generally supportive of tax cuts.

T|10.13.08 @ 12:27PM|#

Is this an actual subsidy, or is it a tax break? I realize the difference escapes some people, but unless they're giving the film production company a check, it ain't a subsidy. Charging less taxes does not equal subsidy.

|10.13.08 @ 1:05PM|#

I believe there is a good friggin' reason that the film industry located in Southern California that has absolutely nothing to do with tax breaks. My theory is that 330 days a year of weather coducive to outdoor filming has a lot whole to do with it.

Another reason the film studios became located in So Cal is that they didn't want to pay the licensing fees being demanded by Thomas Edison for the patents on motion-picture filmmaking he held. Filmmakers felt it desirable to be located on the other side of the country from Edison's lawyers on the East Coast in a spot that provided for the possibility of quickly relocating across the border in Mexico if the need arose.

The irony inherent in the MPAA's lobbying for ridiculously onerous copyright protection given their own history of flight from IP enforcement is totally lost on the studios, of course.

|10.13.08 @ 1:16PM|#

I thought Reason readers were generally supportive of tax cuts.

Across-the-board tax cuts which affect all taxpayers equally, yes; targeted cuts aimed at providing a competitive advantage for some rent-seeking taxpayers over others, no.

Tax cuts which are counterbalanced by spending cuts (as opposed to taxes which are merely deferred) are especially well loved.

Just in case you really didn't know.

|10.13.08 @ 2:42PM|#

Do subsidies really swing that much business?

Boing would have left Washington state a long time ago if they did not get the tax breaks that they get.

Of course they would have just moved to a different state so the net jobs would have simply moved rather then any gain or loss.

TallDave|10.13.08 @ 2:42PM|#

Oh and don't forget, the gov't also pays film and TV producers to insert anti-drug messages so people support the War On Drugs.

LarryA|10.13.08 @ 6:06PM|#

Does Louisiana even *have* that much money?

The people, no. The government? Yes.

Vancouver is kicking LA's ass because of these. So many TV shows are filmed in Vancouver, it's ridiculous.

California union rules might have had something to do with that as well.

|10.13.08 @ 7:20PM|#

I could see an argument that getting your state in movies can be good advertising for your state as a place to live, visit or do business..

Look at all of the good stuff brought to Louisiana by Deliverance! Just can't beat that.

And don't forget that the cut of "profits" producers/state-producrers receive from a film would beat most other investments, from that point of view. Movies make money, unless they really suck AND don't get enough promotion. (Of course, many movies really suck and still make lots of money, but they DO get enough promotion.) Movies also require almost nothing but cash from most of their producers (while recognizing that at least one producer on each movie typically has a hand in shaping that piece and guiding it down a particular artistic path) which makes them good prospects for investors with money but no time to work on the project or knowledge of the industry.