Posted Feb 22, 2012, 2:12 pm
It's like a bad re-run. A few legislators are trying to revive Arizona's film production tax credit (SB 1170) that lapsed in 2011.
According to the last annual report on the effectiveness of the credit, in 2009 four media companies completed production on credit-approved projects. After taking into consideration the small bit of sales tax revenue the film generated while in production, the state paid out a net of just over $2 million in tax credits. That's an average of half a million dollars per project.
How many jobs did that create? About 41 jobs directly related to the project and another 20 that were presumably from the ripple effect on the local economy. An analysis by economists at the W.P. Carey School at Arizona State University shows that these jobs were temporary and, thus, the post-production employment impact of this tax credit was "minimal."
States like Washington and Iowa terminated their film credit programs last year and others have suspended them until their effectiveness can be studied. The general consensus among analysts is that these credits cost more than they're worth and their existence owes more to star-struck policymakers than it does to economic logic.
The Legislature this year, just as they did last year, should avoid putting Arizona taxpayers back on the hook for film production. Arizona doesn't need to buy another ticket to this overpriced flop.
Stephen Slivinski is senior economist at the Goldwater Institute.
1 comment on this story
If the tax credit was not offered in the first place, those production crews would have never come to AZ. So even though AZ paid out about $2 million in tax breaks, those breaks would not have been possible had the industry not come here. It would be like if I gave you 5 bucks, and asked for 3 back. You’re still $2 ahead, even though it appears as if money has been lost. These tax breaks would not be in place if there wasn’t a revenue making machine on the other side of it.