A few weeks ago, I wrote about why film tax credits are a bad idea. Yesterday I received an e-mail from the Heartland Institute that gives further evidence about this flawed policy idea. As the Heartland Institute points out:                             

According to Greg Albrecht, chief economist for Louisiana’s Legislative Fiscal Office, even the most “successful” film subsidy programs bring little value. In Louisiana, he found, “Even if 100 percent of the reported production budget amounts were being spent purchasing goods and services from Louisiana suppliers, the economic benefits would not be sufficient to provide tax receipts approaching a level necessary to offset the costs of the tax credits.”

A report by the Arrowhead Center for New Mexico’s Legislative Finance Committee found for every $1 New Mexico spends on film subsidy programs, the state gets just 14.4 cents back in tax revenue. These findings are consistent with reports in other states.

Doling out taxpayer dollars to filmmakers is no substitute for sound fiscal policy. States should avoid manipulating the tax code to favor the movie industry, or any other industry, over existing businesses. Such “economic development” schemes--film tax credits, state-owned golf courses, publicly financed stadiums, and the like--are nothing more than pork projects.

Instead of pushing an increasingly inefficient film subsidy “arms race,” state governments should look to boost their economies the old-fashioned way: by reining in government spending and creating a tax code that is low, non-distorting, and broad-based.

The e-mail also contained links to a few studies and news articles. One from New England concludes that “revenue losses are exacerbated by the tendency of these tax credits, like almost all tax credits, to subsidize activity not originally targeted and to provide more incentive than needed to induce the desired response.”

Film tax credits, like so many policy ideas, sounds great on the surface. Who isn’t for more films and TV shows being shot in Maryland? But when you look at the details, you find they don’t create economic growth and they don’t lead to more tax revenue to the state. They are a flawed way to help out state’s economy. Policymakers’ time would be better spent in discussing fundamental tax reform instead of providing tax credits to favored industries.