Wes Moss: How Georgia’s film-TV biz could cut your taxes

Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.

Wes Moss hosts 'Money Matters' Sunday mornings on AM750 and 95.5FM News/Talk WSB.

Wes Moss hosts 'Money Matters' Sunday mornings on AM750 and 95.5FM News/Talk WSB.

Can you guess who I had dinner with earlier this month? Denzel Washington. Well, not really, but he did sit at the restaurant table next to ours.

And guess who might get a welcome-t0-the-neighborhood casserole from the Moss family: Owen Wilson. I’m told if I play my cards right I might also get to hang out with other Hollywood A-listers like Vince Vaughn and Cuba Gooding Jr.

I’m not just name-dropping here. If you earn a lot of money, this sudden influx of movie stars could have a serious impact on your tax bill.

Georgia’s Entertainment Industry Investment Act of 2008 gives tax credits of up to 30 percent to companies “producing feature films, television series, music videos and commercials, as well as interactive games and animation,” in the state. ” Recipients of these credits often sell them to other Georgia taxpayers at 85-90 percent of face value, allowing the buyer to pay his or her Georgia tax bill at a discount.

A Georgia taxpayer with $500,000 in taxable income would have a state tax liability of about 6 percent, or $30,000. If that taxpayer instead bought $30,000 worth of “film credits” for 85 cents on the dollar and used them to pay his taxes, he would save $4,500. Hooray for Hollywood!

Obviously, these credits are most valuable to those with large state tax bills. Check with your CPA to see if they might be useful in your situation. (And note several firms around Georgia sell entertainment credits. I’m most familiar with Proscenium Capital Inc.)

Georgia’s willing to forego this tax revenue because the credit policy has drawn millions of dollars in entertainment-related business activity to the state. In 2007, before the credit was enacted, the entertainment industry had an economic impact in Georgia of $241 million. Today that figure is $2.4 billion — an 895 percent increase.

What’s more, the industry is becoming established in Georgia. Instead of landing an occasional three-month movie shoot, the state is seeing a steady stream of projects, including such TV series as AMC’s “The Walking Dead.” As a result, entertainment is becoming a true Georgia industry, one that employs people, creates wealth and generates tax revenue on an on-going basis. (Related links:  Want to be an extra? A look at films shot in Georgia.)

So don’t be surprised if you see Lindsay Lohan shooting a film in your neighborhood, or Clint Eastwood at a Braves game. And if you have a blockbuster income year, ask your CPA if it makes sense to look into buying Georgia entertainment tax credits.

Fun question: Had any celebrity sightings of your own recently?

More serious question: Ideology aside, you see any downside to this tax policy?

– Wes Moss, for Atlanta Bargain Hunter

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producing feature films, television series, music videos and commercials, as well as interactive games and animation.

5 comments Add your comment

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adrian

September 17th, 2012
2:59 pm

If a movie spends $100 million filming in Georgia, the state (under the 30% tax credit) out $30 million from the public coffers. This program is the opposite of revenue creation for the state, it’s a total revenue drain. Since the production companies have no tax liability, they are–by definition–not paying anything but getting free money by selling otherwise worthless paper to wealthy Georgians who would have owed their taxes anyways. Sure the people who work on those films pay income taxes….but is the Georgia income tax rate or sales tax 30%???? Because each dollar paid on a wage or on a good making a film or show will get a 30% subsidy. It’s great you are saving some money on your taxes by dining with Denzel Washington, but ask a laid off teacher how she feels about this use of public funds.

Rusty

September 17th, 2012
9:12 pm

I am sorry you are laid off Adrian. I was out of work too and started a small business servicing the movie production industry in Atlanta. In the past few years I have been able to hire several out of work people to work with me. I even hired a homeless man who was able to find a place to live ater working with us. This industry has created or increased the size of many small businesses in Georgia leading to work for thousands of people here.
The article also mentions that that there has been 2.4 billion dollars of entertainment industry related business in Georgia which, to me is rather significant. In my opinion it has been an incredible use of public funds. If the incentive goes away the industry will disappear in Atlanta along with the businesses and workers that supply them.

DEE

September 18th, 2012
9:23 am

If you are interested in purchasing Georgia Entertainment Tax Credits – here is a great source of information http://www.GaCreditExperts.com Our firm is Georgia Film Credit Consultants and we work directly with the studios and can provide credits in large and small amounts. We’ve been helping Georgians save at least 10% on their taxes for 4 years.

adrian

September 20th, 2012
9:08 pm

Rusty, I am not laid off. But thanks for the misplaced concern. And it’s great you employed people who were unemployed. You are right, $2.4 billion economic impact because of the incentive would be rather significant, especially if it were actually true. But it’s not. Even the sham report touting the program that the MPAA commissioned at the request of the Georgia Entertainment Division showed total direct production spending from 2005-2010 for all incentivized productions was just $1.7 billion–again, that’s combined over five year. And over $412 million of that $1.7 billion came from the money paid out of the Georgia State Treasury which foot the bill for 30% of their spending. The program, according to the same pro-industry biased report supported 8,700 jobs.

As for the Georgia Entertainment Office, they claimed production spending last year was actually $689 million. Now, when the direct spend was $617 million in 2010, even the commissioned report paid for by the MPAA estimated the economic output (direct spend plus the ripple effects) was still just $1.15 billion. That report, for the record, has been totally discredited by actual economists who were not getting paid by anyone: http://wp.me/pI7ny-lz

The $2.4 billion number is, like a Hollywood special effect, totally fake.