Georgia tax incentives and the Miley Cyrus effect
Phred Barnet has a criticism of tax incentives — as opposed to tax reform — up at the web site of the Georgia Public Policy Foundation .
Teen star Miley Cyrus, center, leaves set on Tybee Island. Associated Press
The column includes these paragraphs on state tax breaks for the movie industry:
In Georgia, a new law gives the entertainment industry tax credits for up to 30 percent of production and post-production expenditures. Proponents argue that if Georgia does not do so, it will lose out to other states. This mentality leads to bidding wars that end up offering more and more incentives to the entertainment industry.
Former North Carolina Supreme Court Justice Bob Orr recently complained that “the industry has been able to play off North Carolina against South Carolina against Louisiana against Georgia. Louisiana raises its incentives, and it puts pressure on South Carolina, North Carolina and other states to do likewise.” In fact, only weeks after losing the new Miley Cyrus film to Georgia, North Carolina’s State Senate moved to increase their tax breaks for entertainers from 15 percent to 25 percent.
The chief economist for Louisiana’s legislative fiscal office, Greg Albrecht, estimates that in 2006, Louisiana gave the entertainment industry about $121 million in tax credits, but that only around 18 percent of that money was ever recovered in economic activity and taxes. He denounced the programs as “an expensive way to create jobs,” maintaining that “there’s no way you can say this makes money for the public.”
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32 comments Add your comment
Chris Broe
July 10th, 2009
1:42 pm
The miley effect….a new low.
Gary Powell
July 10th, 2009
2:34 pm
Not following the logic here: How is a tax credit a “cost” to the state if the tax credit creates jobs and fills hotels and restaurants, economic activity that would not otherwise be taking place but for the tax credits?
If Hollywood shoots their big project in another state, we get no taxes and zero economic activity. If Hollywood shoots in GA, we get some taxes and lots of economic activity.
Greg from Marietta
July 10th, 2009
2:50 pm
This is a typical example of the stupidity of politicians. It’s the tax equivalent to a reverse Robin Hood effect i.e. “Tax those who can’t afford it and give credits to those that can”.
Bob
July 10th, 2009
3:20 pm
@ Gary
That money that’s spent in state only generates so much revenue for the state;s coffers. If that amount does not surpass the amount given as a tax break then it’s just costing the citizens of GA money. VS giving no breaks at all.
I think his point is the states should stop givng tax incentives and competing with one another. Too much competition makes all the states lose.
@ Phred: Your blog sucks and no one cares. Find some other way to advertize. This space is for comments, not links to a site that makes you money.
Lewis
July 10th, 2009
3:31 pm
Never mind Miley, who’s the girl on the right?
will jones - the antipope papist baptist Oh Yea
July 10th, 2009
3:32 pm
Alright Jim, explain the cyrus connection. Phred, your blog does suck. Lousy structure, looks bad, too many issues.
ByteMe
July 10th, 2009
3:37 pm
Purdue must have signed a pledge: “No new taxes for celebrities!”
Doug
July 10th, 2009
3:40 pm
@ Bob
Seeing as how it was Barnet’s column that started this blog entry, I think it’s okay for him to let others know where they can read more of his work.
@ Gary
A tax “credit” is not the same as a tax “deduction”. The state is actually giving money to industries in the hopes they will settle here and eventually generate enough jobs to help pay for the subsidies. Essentially, the state is trying to pick winners and losers and, more times than not, it fails. The same happens on the local level, too. A good read is James Cobb’s “Selling of the South: The Southern Crusade for Industrial Development, 1936-1990.” Cobb is a UGA professor and his book details the race to the bottom Southern states have taken in throwing money to industries that likely would have relocated to their states even without the subsidies.
I was heartened to read Barnet’s column. I’m glad to see there’s someone willing to show the difference between being “pro-market” and “pro-business.” Sadly, too many politicians don’t understand this difference.
Gary Powell
July 10th, 2009
3:41 pm
@ Bob: Still not following. Production dollars flow into the state without any real infrastructure costs or needs. They swoop in, spend a bunch of dough, and then leave. These are dollars flowing into the state from out of the state that would otherwise be going elsewhere. The production business is highly transient.
If they leave money behind, and they haven’t really “used up” any infrastructure or resources, how is that a “cost” to the state?
Pete
July 10th, 2009
3:43 pm
@Bob,
I have to agree with Gary. Without the tax credit, the production goes elswhere. With the credit, Georgia gets 70% of the taxes on the production costs. Maybe I don’t understand higher finance, but 70% of something is always more than 100% of nothing, at least in my accounting classes.
Now if the credit winds up with the State giving back money if the credit pays more than the tax revenue, then that makes sense that it would be a loss but I don’t read it that way. Without looking at the law, I would hope that the credit will never be allowed to exceed the tax liability or if it does, it nets out to zero, but I don’t know that for sure. Even if it nets to zero for the direct expenditures of the production, the multiplier effect of the resulting trickle down expenditures from the suppliers should mean something.
neo-Carlinist
July 10th, 2009
3:45 pm
States give tax credits to corporations because States exist to govern citizens… wait a minute that’s wrong. States give tax credits to multi-billion dollar enterainment enterprises and sports franchises because the Consitution was written to protect the “rights” of businesses at the expense of citizens… wait, that doesn’t make sense. States give tax credits to businesses because they don’t care about taxpayers or citizens. Is this news to anyone who actually PAYS taxes?
Skip
July 10th, 2009
4:12 pm
Bob, sorry your wrong and Gary is right. We don’t “give” them anything. We collect less than we could with no tax break. Except we would collect nothing as they would be spending their $$ in another state.
Gary Powell
July 10th, 2009
4:18 pm
@ neo-Carlinist: There are literally hundreds of people paying taxes and spending money because they have jobs working with the production industry . . . an industry that doesn’t have a “factory” or “plant” or other infrastructure and could easily pick up and move elsewhere. These working people would otherwise be . . . unemployed and a burden on the State . . . or moving to another state where the production industry is strong. People are moving to GA every day from California because the business is here. They are getting paid here, and they are paying taxes here. This actually increases our tax base.
I think it’s a bit of a stretch to think that our rather conservative Governor and Legislature is sticking it to tax paying citizens to benefit Left Coast financiers in Hollywood.
Gary Powell
July 10th, 2009
4:28 pm
A couple of links for everyone interested in a non-polemic debate:
http://georgia.org/GeorgiaIndustries/Entertainment/FilmTV/Pages/FilmFacts.aspx
http://georgia.org/GeorgiaIndustries/Entertainment/AboutUs/Pages/Incentives.aspx
Buzz
July 10th, 2009
5:20 pm
I think Gary is the one that is right here. If the Film Industry is filming in other locals, we as Georgians get nothing. Miley’s movie on Tybee has to be increasing the economy there.
Christopher Cook
July 10th, 2009
6:43 pm
How much of that money on that movie will go towards Tybee Island economy and how much on pampering Miley? She has become a spoiled princess of late.
BDubbs
July 10th, 2009
6:56 pm
I agree with Gary and the others—-70% OF SOMETHING IS BETTER THAN 100% OF NOTHING—-this is real basic stuff people. The production that moves elsewhere nets nothing. and, support businesses like caterers and providers of services to the production collect income for themselves that can collect additional full sales taxes. etc. This is not calculus.
Deadelvis
July 10th, 2009
7:22 pm
You people really are public school educated – If the film was shot in LA or any other state what money would GA get. 0 or zero. A credit is a tax credit. Plenty of money is made with this movie being made in GA. It is just the government does not get as much as they think they should. Private biz does fine. If the movie is not shot here both get zero. It is private biz that runs the economy not the government – regardless of what the current admin wants you to think. PRIVATE SECTOR – GOVERNMENT DOES NOT PRODUCE INCOME -IT TAKES INCOME – stupid blog – for stupid people
heeldawg
July 11th, 2009
1:27 am
The effects on Tybee for this particular film will go a long way beyond the immediate economic impact. The film is employing Georgians in the film support industries (the lighting and film crew folks are actually from Atlanta), and the cast and crew members are staying in Georgia hotels and houses and eating in Tybee restaurants (Greg Kinnear picked up 30 pizzas from a friend’s pizza joint on Tybee the other day). All of these businesses pay taxes, so the Georgia tax base is positively affected–even if a lot if it goes to “pampering Miley.”. As others have said, if the film is made in North Carolina, we get none of this revenue whatsoever.
However, as the film is made at Tybee and calls Tybee by that name, I suspect there will be a positive long-term effect on tourism, as well. Anything like this that attracts private industry to Georgia and employs Georgians at a time when the unemployment rate in this state hovers near 10% is good for the local economy
The Toad
July 11th, 2009
9:10 am
She can make a movie at my house anytime.
Pi$$onaDawg
July 11th, 2009
10:54 am
There should be NO TAX Breaks for any business in any state to make the playing field even. Make your business in a state because of the resources not what politation you can buy. Tax the CRAP out of an American Business that moves to do work out of the country. That includes MOVIES. We can built sets to look like anyplace in the world or use computers to green screen any back ground too. The 1996 Olympics cost Atlanta and the metro more money than it made. The growth is costing taxpayer to this day.
Tiffany
July 11th, 2009
11:21 am
THANK YOU GARY. As a recent graduate of a Georgia State University film school I think it’s great the the state has decided to uses these tax cut to help boost the economy. It will allow me to remain in the state of my BIRTH, surrounded by family and friends, an still have a career. Georgia has too many film programs not to provide more in terms of production based work.
filmga
July 11th, 2009
11:47 am
My film producer friend recently scouted several other states trying to determine where to locate a tv series. Without question, Georgia was the front-runner and ultimately landed the production. The series will ultimately employ 75-125 crew members long term who (mostly) pay taxes in Georgia. The series could run for years and not only employ the afore-mentioned number of crew, but will financially impact film support businesses (over 200). The economic impact for this production translates into mega millions in terms of 1( increased numbers of productions filming in state, 2) hiring local crew 3) economically supporting local film support companies and talent 4) using hotels, rental cars, restaurants, grocery stores and cultural amenities. Many families join or visit their spouses on location during filming and further use/increase use of these services,etc. A complete “net gain” for GA. Film companies often locate their productions in GA, spend countless millions of dollars, and leave. What could be better for GA? No infrastructure costs….what we like to call “clean money.”We could use some of that.
Filming in GA also benefits many rural communities as filmmakers often chose to film in GA based on their classic southern, small town locations and period/historical homes and locals.
filmga
July 11th, 2009
12:30 pm
By the way, GA has and is known for having one of the best Film Commissions in the country. Yes, there are incentives, but combine that with a crack state location staff, and you have a formula for economic success.
No, I don’t work there, but I wish I did. An outstanding group of dedicated professionals working to bring big dollars to the state.
Roy Grace
July 11th, 2009
12:36 pm
Been in the movie busiess for 30 years. Recently sidelined due to accident but will be back to work again soon. Yes I would like to work in my home state and then spend my paycheck here but if GA residents, who for the most part know NOTHING of the motion picture industry or politics involved want to do away with tax incentives, fine with me, I travel with a special piece of equipment and will gladly travel to New Mexico, Louisiana, Mass or Michigan where I will do the same job and make more money with housing and per diem and spend the money there and enjoy the travel and meeting new people. So if narrow minded indivduals do not have the cerebral ability to understand the benifits of the film industry to GA’s coffers then so be it, pay your ever increasing taxes and then complain about the lack of jobs in GA you will only hurt yourself.
Nikki S.
July 11th, 2009
12:37 pm
Y’all need to be reading Daily Yonder. In this post (http://www.dailyyonder.com/what-happens-when-you-dont-own-land/2009/07/03/2205) for example, he talks about how the coal industry has gotten out of paying *property taxes* and how that’s killing coal country and contributing to poverty in Appalachia. It’s not the SAME as the argument being made here, but it’s similar – regardless of the job creation or anything else, the lack of tax revenue, in either of these cases, makes having the business of either Hollywood or Big Coal pretty counter productive.
Skeet Dawg
July 11th, 2009
12:47 pm
I think we give to many tax credits and exemtions. I think lawmakers give tax exemptions to all their buddies and $ donors. Why do we give a tae exemption to sod? we are the Peach State. AJC should do a story and investigate the sales tax code to uncover who and just what gets a sales tax exemption. The lawmakers give it for a specific reason such as expansion of the Atlanta ZOO but it has no time frame attached to the exemption and they get it from now on. Time to clean house under the Gold Dome in 2010!
Base
July 11th, 2009
1:21 pm
Sorry Sonny and the goofy legislature keeps giving our taxes away for films and corporate relocations and then notes that the budget must be cut because tax revenues are down.
gagirl
July 11th, 2009
1:37 pm
Base,
You’re overlooking the millions of dollars, beyond the exemptions, relocating companies are generating in the Georgia economy over the short and long term. Film companies just happen to spend theirs immediately….a quick infusion of BIG money into the local economies they’re impacting.
Permanently relocating larger corporations etc. will benefit the state coffers over a longer period, but are creating long term, high-paying jobs for hard working people who NEED that paycheck NOW.
SAM
July 12th, 2009
9:43 am
I am well aware that this is a political discussion, but I cannot resist sharing with you my involvement with Tybee Island and Miley Cyrus movie making.
The Miley movie, did have a positive effect on Tybee Island and tourism but it was very poorly planned out,
I was there on vacation. There were more tourist than usual. Twice, a section of the beach was closed to the public that effected my annual visit there. Not a problem at first. The second time the beach was closed to the public, me and a group of people were on the beach walking barefoot at the edge of the ocean and we were kicked off the beach and not allowed to walk back from where we came from the beach we were on. Does anyone here know just how hot sand can get in Savannah, Ga? I do. My feet were blistered to the point that no person should have to endure because of a movie making event. The last two days of my vacation were effected in a negative way because of the making of this movie.
I was at least a mile in distance away from where my family and I put our towels and things.
My point here is that if movies are to be made here in Georgia, then they need to accomodate the Georgians and those who come to visit here better than the Miley incident. I will not go see the movie and she is not allowed on my TV anymore……
Oh, and we (the group of people on the beach) were told we were ruining the shot of the movie…..
Gary Powell
July 12th, 2009
11:32 am
More Free Money for Georgia! And we don’t have to cut trees, scalp mountains, or build roads or infrastructure . . . all we gotta do is take out the trash and count the money.
Two more TV shows to be shot in Atlanta
CW’s “Vampire Diaries” and Fox’s “Past Life”
Atlanta Journal Constitution
1:15 pm July 8, 2009, by Rodney Ho
Two upcoming TV shows are going to be shot in the metro Atlanta area: the CW’s “Vampire Diaries” and Fox’s “Past Life.”
Thank last year’s tax incentives boosts for these two shows being here, along with Lifetime’s “Drop Dead Diva.”
Neither show has any major stars. “Vampire Diaries” clearly is playing off the popularity of the “Twilight” film and book series and the momentum of HBO’s “True Blood.” Vampires are hot! And since this is the CW, this will be a teen-oriented vampire show to boot. “Vampire Diaries” is based on a series of books by L.J. Smith.
The show is set to air after “Supernatural” on Thursdays at 9 p.m. this fall.
http://blogs.ajc.com/radio-tv-talk/2009/07/08/two-more-tv-shows-to-be-shot-in-atlanta-cws-vampire-diaries-and-foxs-past-life/
frau kennenlernen/traumfrau kennenlernen
June 26th, 2010
9:28 pm
Awesome info! i was honestly just thinking about something similar to this the other day so, it was almost weird when i ran across this. You would be surprised how many people simply have no idea when it comes to this kind of stuff. Anyway, thanks for getting this really good info out there and i am sure i am not the only one who appreciates you taking the time to post this for the masses.
I a blog owner too.
L8er