Film Subsidies

Michigan's Film Industry took $500 Million in Subsidies, Produced Laughable Number of Jobs

Economics 101



Even though Michigan's film incentive program is widely considered to be a monumental failure, there are evidently still some politicians in the state legislature that want to keep cutting checks to Hollywood. House Minority Leader Tim Greimel, a Democrat, is attempting to restore $12 million in funding to the sycophantic subsidy, according to the Mackinac Center for Public Policy:

House Minority Leader Tim Greimel, D-Auburn Hills, is calling for $12 million to be restored to the $50 million originally appropriated for film production subsidies in the current year. The money was cut by an executive order signed by Gov. Rick Snyder.

The news site MIRS reported that Greimel's spokeswoman Katie Carey said the film credit program "has been a good job creator for the state."

"I think if you did an investigation of all the tax credits, you'd find that with the film credits, that's one of the areas that has been a big boon for the state of Michigan for both job creation and economic vitality for local communities," Carey told MIRS.

Hardly. The state has funnelled $500 million in public funds to its fledgling film industry since 2008, and has almost nothing to show for it. While some jobs were created—temporary production crews, mostly—those were offset by the losses to the sectors of the economy that had to finance the film subsidy (i.e. Economics 101). The Mackinac Center checked the Bureau of Labor Statistics data and reports that in the long run, there are about as many jobs in the film industry in Michigan today as there were in 2001.

Images from Michigan May Send Film Credits to the Cutting Room Floor

Gov. Rick Snyder (R) has taken some steps to reduce the subsidy, and the Republican-controlled legislature is attempting to eliminate it entirely. Good riddance. Of all the things for the government to spend working people's hard-earned money on, enriching Hollywood is surely among the worst.

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  1. those were offset by the losses to the sectors of the economy that had to finance the film subsidy

    Opportunity cost is not seen, therefore it doesn’t exist. Duh.

  2. Michigan has a film industry? Learn something new everyday.

    1. A Very Harold & Kumar 3D Christmas
      Red Dawn
      Batman v. Superman (in production)

      and a few others. The Harold and Kumar movie had a cameo by a friend of mine (she’s mildly embarrassed about it, though…)

      Although I don’t doubt Robby’s right about it costing more than it brings in, it’s kinda fun having crews set up for a couple of weeks and blow things up or change downtown Detroit into New York (I blundered into that set on the way home one day and was surprised by the Xmas decorations in July, not to mention the NYC street signs.)

      1. that was the best harold and kumar since the first one- maybe better.

  3. Do you suppose that 25 years ago when Neil Patrick Harris was getting drilled into the sofa in Steven Bochco’s office that he ever imagined he would someday be the go-to host for major entertainment award shows?

    1. Well, isn’t that how he met your mother?

    2. He and his partner have been featured on my latest copy of Architectural Digest. They’ve got a perfectly fab home.

      1. You mean his husband, right?

        1. I have no idea if they’re married.

        2. *flips to page 77*

          Yes, they’re married. Harris is married to actor David Burtka. Who I’ve never heard of.

    3. he was 15 then… something something libel…something something.

    4. “major entertainment award shows”

      I know he hosted the Oscars last night, but when did he host something ‘major’?

      1. Starship Troopers after party.

        1. “Would you like to learn more?”

  4. I heard a number of Michiganders say that they didn’t care about the cost to the taxpayer – it’s just cool to have films being made just down the street!

    1. I heard a number of Michiganders say that they didn’t care about the cost to the taxpayer

      A common refrain and one that explains plenty about Michigan.

  5. the film tax credit is being debated in NC now, and the industry produced quite a few jobs. When the General Assembly said the tax would go away, GA/SC/VA all rejoiced. Lawmakers are trying to simplify the tax code and do away with all incentives, which is nice if the 49 others states do likewise. At least in practical terms. I get the principle.

    1. Yup, whatever film industry Michigan has will just move to another state that’s willing to pay the bribes. Same as any other “jobs incentive”.

      1. If the state of Michigan wants to force its citizens to pay so that you Virginians can enjoy cheaper movies, what’s the problem?

        1. I don’t think the production cost actually has anything to do with the price of a movie ticket…

          It might have something to do with if the movie is made or not… but I doubt it.

          1. It does in a loosely coupled sense.

            Yes, the price of a good is really dictated by what consumers are willing to pay.

            HOWEVER, when production costs go down (for example if the guys in Shelbyville pay movie companies 2 mill raised by the “Cousin marryin’ tax” per movie), then the movie company can increase their profits by selling more tickets or increasing their distribution by lowering their prices.

            Since inevitably in a market of many providers, some guys cut their prices to take advantage of this extra profit, consumers see lower prices from some suppliers and adjust their expectations accordingly.

            For example, people who would tolerate paying $2,000 for a 19″ TV 20 years ago would definitely refuse to do so now.

            This is why subsidies are a bad deal for the people being taxed to provide them and a great deal for everyone else. The benefit is distributed over a wider area than the guys who are paying the subsidy.

            1. Note that NATO (the national association of theater owners) is a separate organization to the MPAA.

              Subsidies reduce the cost of making movies by the MPAA’s members (the big six movie studios), who then sell them to NATO who reap their money from ticket sales to the public.

              The chance that the general public would actually see reduced ticket prices because the cost of producing movies has gone down due to subsidies are effectively zero. The movie studios and theater owners will simply pocket the difference, as evidenced by the fact that both ticket prices and national & international film subsidies (almost all of which invariably go to the same six companies all based in Southern California) have increased dramatically over the past 10 years.

  6. I am not clear on what is going on here.

    Are subsidies to the film industry like subsidies to the oil companies? Or is the state actually cutting them a check?

    1. In the state of Washington, they would cut a check based on a formula of how much money the production company spent in the state. In addition, the production company would be exempt from certain taxes on things like hotels.

      1. And yet everyone still films in BC.

  7. Why can’t they pay those subsidies from union dues? Many of the jobs are union.

  8. Atlanta has a thriving film industry. I wonder to what extent it is subsidized by the government?

  9. So mailing 2,500 random Michigan residents a check for $100K each would have been half as expensive. Crop-dusting the state with $125 million in cash would be half again cheaper.

    I would be a kick-ass member of the state Finance Committee.

    1. Better yet, drive down the street like the Joker in the 1989 Batman movie, throwing sacks of money around.

      1. only if it’s followed by a massive dose of smilex.

  10. The lesson from this article is clear enough: Michigan needs to spend more on its film subsidies.

  11. I would think that Detroit would have a lock on any movie portraying a dystopian future even without subsidies.

    1. you would still actually have to travel to detroit to do that. It’s cheaper to use CGI.

      1. Detroit was actually a stand in for Hong Kong in the most recent Transformers film because it was easier to shoot there than to make parts of China look like it had been blown up (plus, the Chinese are very keen on only having China shown in a positive light, whereas US film subsidies generally have no such requirement).

      2. CGI would sanitize the horror of Detroit. Much grittier and realistic if you do it on location.

  12. Are we talking actual subsidies where they are cutting them a check from state coffers or “subsidies” where they are given tax cuts? If it’s the latter, I don’t give a flying fuck. If it’s the the former…I also don’t give a flying fuck because I cheer on Michigan’s demise.

    1. They’re subsidies, you shoot in location X and location X typically refunds you 30-35% of what you spent (this is common in all heavily subsidized filming locations).

      Michigan is one of the smaller subsidy states, New York, Louisiana, Georgia & California are the four big ones now, but something like 40 out of the 50 states have some kind of film subsidy program and they’re nearly all true subsidies rather than tax cuts because cutting taxes isn’t nearly enough to induce the film industry to show up.

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