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Reason
Reason
Entertainment
Eric Boehm

Georgia Taxpayers Lose $160,000 for Every Job Created by Film Tax Credits

For nearly two decades, Georgia has lured big-time Hollywood movie studios with the promise of lucrative tax breaks for filming in the state.

And here's a predictable plot twist: Handing out welfare to wildly successful movies—like Avengers: Endgame, which earned more than $2 billion at the box office but nevertheless also qualified for tax credits because it was filmed in Georgia—hasn't been a good deal for taxpayers.

A new audit of Georgia's Film Tax Credit program found that the state "loses money" on the program. A lot of money, actually: about $160,000 for every job the program creates. Georgia is now spending about $1.3 billion annually on the program, but it generates a return on investment of just 19 cents per dollar, the auditors conclude.

"This program should be halted immediately," J.C. Bradbury, an economics professor at Georgia's Kennesaw State University and a longtime critic of government subsidy schemes, posted on X (formerly Twitter). In a 2020 paper, Bradbury estimated that the state's film tax credit program cost about $110,000 per full-time job created and that every Georgia household was on the hook for about $230 in additional taxes every year because of the program's existence.

In addition to highlighting the tax credit program's costs, the new audit also suggests that the film industry has inflated the supposed benefits of the program. Georgia's film tax credit is responsible for creating about 34,000 jobs annually in the state, according to the new audit, but that's well short of the 59,700 annual job-creation figure that a recent industry-funded study claimed, reported Variety.

Created in 2005, Georgia's subsidies for movie and TV production are the biggest such pot of cash available anywhere in the country. Production companies that spend at least $500,000 in the state during a single year are eligible for tax credits equal to 20 percent of their in-state expenditures. There is no cap on qualifying expenditures for production companies, and there is no aggregate cap for annual or lifetime tax credits, according to the audit report.

There's no doubt that Georgia's program has influenced where movie and TV production takes place. The new audit concludes that the program has induced "substantial economic activity in Georgia," but that's simply evidence of the fact that lighting a lot of money on fire will eventually produce some heat. The underlying numbers suggest that Georgia's subsidies are doing a poor job of generating economic growth or creating jobs.

It's been the same story pretty much everywhere else, though many states have gotten wise to the film tax credit scheme. In 2009, 44 states subsidized movie and TV production with some combination of rebates, tax credits, and grants. Today, just 22 states and Washington, D.C., offer those programs.

Even though Georgia's program has a long history of bipartisan support, changes could be coming. As Reason's Joe Lancaster reported earlier this year, Lieutenant Gov. Burt Jones and Georgia Speaker of the House Jon Burns (R–Newington) have pledged to undertake a thorough review of the state's tax credit programs, including the film tax credit, with an eye toward "ensuring a significant return on investment for Georgia's taxpayers."

With this new audit in hand, Jones and Burns should do their best Thanos impressions and turn Georgia's deeply flawed movie welfare program to dust.

The post Georgia Taxpayers Lose $160,000 for Every Job Created by Film Tax Credits appeared first on Reason.com.

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