Corporate Welfare

Michigan Lawmakers Green-Light Sequel to Terrible Film Subsidy

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Hollywood
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It's the sequel nobody wants, but Michigan legislators are determined to make it anyway: The state senate voted this week to extend Michigan's insanely generous film industry subsidy package.

The subsidy works as an incentive to lure filmmakers to the state by refunding their expenses at a direct cost to taxpayers. It's crony capitalism of the worst sort, merely transferring money from the producers that succeeded under the free market to the producers that require government's assistance. Supporters had hoped to create a film industry in the state of Michigan—unfortunately, every other state had the same idea, creating an arms race between governments attempting to out-subsidy each other in ludicrous fashion.

Michigan spent $500 million trying to convince Hollywood to permanently relocate to Detroit. The effort failed spectacularly; according to the Mackinac Center for Public Policy, there were actually fewer film jobs five years after the approval of the incentives than there were before. Consequently, a Republican legislature and governor took steps to rein in the program.

Now Senate Majority Leader Randy Richardville, a Republican, has convinced his chamber to vote to restore the incentive. It is expected to face more serious opposition in the House, however. According to Mackinac:

Mackinac Center experts have railed against the subsidy program because it has cost nearly half a billion dollars, but resulted in no new jobs, takes money away from other projects that better serve the public and is widely recognized as one of the poorest ways for states to spend tax dollars.

Of all the stupid things for the government to do, take everybody's money and give it to movie stars has to be among the worst.

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  1. A few years ago Saskatchewan got rid of their film subsidies..I think…? Yay.

  2. Since there’s no way these bozos believe subsidizing $500 million in film activity will bring in more than than number in taxes later, I’m left to conclude they’re doing it merely for prestige. And then I roll my eyes at the sort of person who thinks movies are somehow prestigious.

  3. Hollywood gets something like $3bn (yes, billion, with a b) a year in film subsidies from states & countries around the world all trying to bribe them into shooting in their locale because legislators are dumb enough to believe the bullshit the movie studios are feeding them.

    On the face of it film subsidies seem like a good idea because unlike real jobs, the film industry is highly mobile, so you get “job creation” quickly without all that pesky waiting around involved in say, building a car manufacturing plant. Of course, the highly mobile nature of the industry also means that as soon as the subsidies stop, the white trucks roll out and onto the next state to dangle the carrot taking any jobs with them.

    Hollywood doesn’t NEED subsidies, but as long as starry eyed legislators (just watch how many of these muppets like to call their provinces “Hollywood North/East/South”) are happy to hand out taxpayer money as bribes in exchange for pretending that they’re part of the film industry, Hollywood will keep showing up with their carpet bags and sucking the states dry.

    Not a single one of these subsidies has done what they were intended to, that is, to kickstart a domestic film industry, all they’ve done is make the job of making movies cheaper for Hollywood, who are NEVER going to leave their Southern California home as long as they can con taxpayers into covering a third of the cost of movie making for no return on the profits.

  4. Southern California attracted the film industry for a couple of actual, real-world reasons:

    1) bright sunshine is abundant and rain is rare
    2) there is a wide variety of different landscapes within a short journey of Hollywood – deserts, mountains, snow-fields, beaches, forests, etc.

    Most places that are passed off as foreign countries and other planets in movies are somewhere within 70 miles of Hollywood – the High Desert is particularly fruitful for alien landscapes.

    Michigan’s chances of becoming the center of the film industry are roughly 0%, no matter how many subsidies they issue.

    1. MASH was filmed in Malibu, for example.

      1. One of the exact things I was thinking of – if you watch it knowing that, you find yourself wondering if there really is that much sagebrush and manzanita in Korea.

        Gilligan’s Island was in Long Beach, if I remember.

        1. I was pleasantly surprised to find out that Korea doesn’t look like Southern California at all.

          1. Give the boys in Sacramento time.

            Oh, you meant South Korea!

    2. Exactly.

      Not to mention, the real power in the movie industry is on the financing & distribution side of things, which is heavily controlled by the major film studios in Hollywood.

      All these subsidies are doing is reducing the cost of movie PRODUCTION, which is the dirty, risky part of the movie industry, which is why Hollywood are more than happy to let everyone else fight each other to see who can give away the most taxpayer money.

      Who wouldn’t love a silent partner who’ll cover a third of your costs for no return on the profits?

      The states & countries subsidizing Hollywood are all being played for fools, but they’re too enamored with the “glitz and glamor” to see what suckers they are.

    3. Actually, Detroit is a pretty good stand-in for New York (I accidentally drove through the set for Harold and Kumar’s Christmas a couple of years ago, only becoming aware when I saw the Christmas decorations up in July, not to mention the NYC street signs).

      And it’s also currently a stand-in for Gotham, leading to sightings of Ben Affleck, among others, in local restaurants.

      Of course, aside from the star-sighting thrill it doesn’t buy us Michiganders much, as the article points out..

      1. I could see it being a cheaper alternative to filming in a functioning city.

        That is something that CA really does lack – anyplace that looks much like a big city without being recognizably San Francisco.

  5. Nothing a couple of bullets couldn’t fix.

    1. A couple? What a waste! Just line everyone up; work smarter, not harder, people.

  6. It’s funny how there’s been no article about this on Salon.

  7. Let’s get some perspective here on the quoted section from Mackinac.

    1) What exactly is a “film job?” Seriously, how is that defined in the terms of counting for the purposes of the claim that there are less of them now then there were when the film incentive program first started? And along those lines, I’m sure there ARE less, because when they got axed by Snyder in early 2011, the work that WAS booming for the crew members who hopefully make up these “film jobs” were forced to move elsewhere for work. I know several individuals who left for Los Angeles, New Orleans, and Atlanta when their opportunities for work disappeared overnight.

    2) The film industry subsidy is a poor excuse for MI’s roads being in the constant state of cheese-grater that they are. Nope. It’s not like the roads got that much WORSE when the incentive was active.

    3) Of course spending money on movies is stupid. The film business is like an event. Everyone says “Superbowl” or “World Series” and the talk is often rife with how much money is injected in the local economy, in sales and in contract labor. Film production does the same thing on a smaller scale.

    Do I think MI did it poorly, yes. I’ve yet to see a program that is measured ACCURATELY, as I think it’s impossible. But when it is written so poorly as to overwhelmingly favor the above-the-line salary costs of the cast, director, and producers, it is a poor use of taxpayer dollars.

  8. Why not just go the Irish route, and exempt creators of media from income tax on their pay?

    1. Because it’s not enough.

      Michigan’s state income tax is 4.25%, whereas most film subsidies are around 25-35% of total spending.

      That’s the key issue there, you get a refund based on your spending, not your taxes, so the tax refund is typically substantially larger than any tax bill.

      Film jobs aren’t going to states with no income taxes like Texas, they’re going to states & countries with huge rebate schemes like the UK and Canada, which would be prohibitively expensive to shoot in were they not refunding a full third of the cost to the movie studios.

      Incidentally, Ireland’s “production incentive” is 32% of total spending, which is roughly in line with most other territories, including Michigan.

      1. I had no idea it was that much! You’d think that instead of paying that much for someone else’s movie, those gov’ts would go into the biz themselves. They might even make profits.

        1. It’s absolutely insane, they’re doing nothing but making it cheaper for Hollywood to make movies, instead of actually building their own film industry.

          At the very least, they should be dealt in like any other producer – that is, if they’re funding a third of the cost of the movie, then they get a third of the profits.

          … I guarantee you that if all the states & countries subsidizing movies started demanding a fair share of the profits, Hollywood would suddenly remember how to make movies without government assistance.

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