Red State Wealth Transfer Fails Spectacularly

One state-level program that has traditionally generated substantial bipartisan support is offering up taxpayer money to movie studios. The intent: convincing the makers of films, TV shows and such to stage their productions in a particular state. The result: more jobs for locals, greater economic activity for businesses and a tax windfall for the state.

But as is so often the case with economic development schemes, be they federal, state or local, is that such wealth transfers rarely live up to the hype.

A recent audit of Georgia’s tax credit program for movie and TV productions showed that, while the state was quite generous with taxpayer money, the costs and returns were…well, let’s call them “suboptimal”:

Consistent with studies of other state film tax incentives programs, the State of Georgia loses money. We calculate a state fiscal ROI of 0.19 for FY 2024, or a loss of 81 percent, using the estimates generated from the representative year of 2022 and using credits generated of $1.35 billion.

That’s…horrifying. But wait, the news manages to get even worse (for Georgia taxpayers):

The net credit cost per job is calculated as $1.3 billion in generated credits divided by net job creation of -6,770. Thus, Table 15 indicates that there are an estimated $199,359 credits generated for every one job that an alternative use would have supported. Considering utilization rates over time, this corresponds to a net present value (NPV) cost of $160,009 for every net job. [emphasis added]

As Kennesaw State University Prof. J.C. Bradbury wrote on X:

The big takeaway from the latest audit of Georgia’s film tax credit. It has an ROI of 0.19 (state taxpayers lose 81 cents on the dollar) and a loss of $160,000 for every job created. This program should be halted immediately.

Indeed, it should. But more likely than not, the program won’t end. There may be a few nips and tucks in its operations. But rare is the politician(s) who will end a program that allows other pols to play Santa Claus…with other people’s money. Never mind one that generates so many opportunities for small town pols to rub shoulders with Hollywood grandees.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.

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