As part of his plan to improve Maryland’s economy, former governor Bob Ehrlich has been touting a proposal to give corporate welfare to film makers. This may sound like a fine idea to lure companies to film in our state, but it’s unlikely to work. There is little evidence that such subsidies create economic growth. If policymakers want to help our state’s economy, that won’t happen through subsidies or tax credits for favored industries– it will happen through making our state more attractive to businesses overall.

Ehrlich points out that when the film subsidy program was funded at a higher level, more movies and TV shows were filmed in Maryland. Of course, the cutting of subsidies and the purported loss of filming in the state may be mere coincidence. In fact, it is likely that the decrease in film jobs in Maryland has everything to do with the economy and not with any lack of corporate welfare. Look at Michigan, which instituted a film subsidy program in 2008 and has still seen its film jobs decline.

In a study on film subsidies released earlier this year, the Tax Foundation noted:

Based on fanciful estimates of economic activity and tax revenue, states are investing in movie production projects with small returns and taking unnecessary risks with taxpayer dollars. In return, they attract mostly temporary jobs that are often transplanted from other states. States claim to boost job training with MPIs, but these tax incentives often encourage individuals to gain skills that are only employable as long as politicians enact ever larger subsidies for the film industry. Furthermore, the competition among states transfers a large portion of potential gains to the movie industry, not to local businesses or state coffers. It is unlikely that movie production incentives generate wealth in the long run. Most fail even in the short run.

Film subsidies won’t create economic growth in Maryland and their shrinkage under O’Malley was an unlikely culprit in the decline of film jobs in the state. Maryland has a poor tax and regulatory climate for business and rectifying the burden the state places on business owners (all business owners, not just those in the film world) should be a priority for our policymakers.