Netflix's 'Don't Look Up' Got $46 Million From Massachusetts Taxpayers

According to recently updated figures, more than half of the state's film production credits for 2021 went to just one film, whose two stars collectively earned over $50 million.

Newly released state revenue data shows that Massachusetts taxpayers played a major role in funding a mid-budget Hollywood movie about climate change.

The dark comedy Don't Look Up premiered on Netflix in December 2021. In the film, a team of scientists discovers that an asteroid will soon hit the Earth and destroy all human life, but they find that nobody wants to heed their warnings. A blunt allegorical tale, the movie tries to do for climate change what Dr. Strangelove did for nuclear war.

The film grossed less than $800,000 worldwide against a budget estimated between $75 million and $110 million. (Since the film debuted on a streaming service, box office receipts matter less than viewership numbers: Viewers streamed the film for 111 million hours in its first two days and then for another 152 million hours over the following week.)

Variety reported that stars Leonardo DiCaprio and Jennifer Lawrence received $30 million and $25 million, respectively, though that total includes money from Netflix to compensate for the film not receiving a wide theatrical release, since stars could otherwise negotiate for a percentage of the box office proceeds. But as it turns out, more than half of the production budget came not from a studio or a producer with deep pockets, but from Massachusetts taxpayers.

Like many other states, Massachusetts offers tax credits for film and television productions that film in the state. In particular, Massachusetts offers credits worth 25 percent of a production's expenses and payroll tax liability incurred in the Bay State. If the credits exceed the production's Massachusetts tax liability, they can claim 90 percent of the remainder as a refund. There is no maximum, and the credit is transferable, meaning a production company can sell it to another company or taxpayer and pocket the cash.

This month, the Massachusetts Department of Revenue released updated numbers for the 2021 tax year. Much of the film tax credits went to productions like This Old House ($545,159 over two series) and Antiques Roadshow ($687,403 over two seasons). But the new numbers also show that of the $73.3 million total that the state reports spending on film tax credits for 2021 productions, a whopping $46.3 million went to Don't Look Up.

In other words, Massachusetts taxpayers covered more than 84 percent of the two stars' salaries, or between 42 percent to 61 percent of the film's entire budget.

Supporters of such programs argue that they stimulate the economy: "The level of impact and the amount of benefits the film tax credit brings to Massachusetts is immeasurable, creating local jobs and boosting overall economic activity in our cities and towns," state House Speaker Ronald Mariano (D–Quincy) said in 2021 after the legislature voted to make the credits permanent. State Rep. Tackey Chan (D–Quincy) said the production of Don't Look Up means more than 15,000 hotel room nights rented in the state.

But evidence doesn't bear out that optimism. According to a 2021 report by the Tax Expenditure Review Commission, while "by its nature, this credit produces immediate and measurable spending within the Massachusetts economy…the Film credit has had no discernable impact beyond its one-time spending. Further, much of the initial spending that qualifies for the Film credit occurs outside of Massachusetts, providing no benefit at all. The result is that, while the film credit provides some immediate stimulus, it does not contribute to the long run growth of the state's economy. Even though we are able to measure in detail all of the economic benefits of this credit, it still results in a cost of $100,000 per job created. We conclude that this is not the best use of the state's money."

The story is the same in other states. State auditors found that Georgia's film credit program cost the state $160,000 for every job produced, a return on investment of just 19 cents on the dollar. According to the New York state government's economic development entity, "The Film Production Tax Credit program is designed to strengthen the film production industry in New York State and its positive impact on the State's economy." But even though state lawmakers plan to spend as much as $700 million on production credits this year, a December 2023 audit found that the credits were "at best a break-even proposition and more likely a net cost," with a return on investment of 31 cents on the dollar.

In Don't Look Up, writer-director Adam McKay crafted an allegorical tale about climate change denialism, similar to how he previously depicted the 2007–08 financial crisis in The Big Short. Perhaps with his next film, he could turn his trademark wit to another public policy shortcoming: the tendency of central planners to use other people's money to shape the world to their own will.