May 15, 2023 - 9:00 pm
Roberta Lange sees stars — of the Hollywood type. The state senator, a Las Vegas Democrat, has sponsored a bill to vastly expand Nevada’s film tax credit program to lure more movie and TV production to the state while providing subsidies for showbiz companies to relocate here.
Ms. Lange describes Senate Bill 496 as economic development that will help diversify the state economy. Her legislation includes “transferable” tax credits that can be sold to other companies looking to save money on taxes. In the long run, she said she hopes the $3.8 billion worth of incentives, spread over 20 years, will nurture the “creation” of a new Nevada industry that will generate tax revenue far in excess of the public “investment” required.
Of course, every special pleader says the same thing. But that can’t be true in most instances. Otherwise, how do free markets routinely outperform bureaucratic central planners when it comes to efficiently providing goods and services to the widest possible audience?
In fact, the burden should be on Ms. Lange and supporters of SB496 — which includes some prominent Republican lawmakers — to show that it will deliver results. State film tax credits have been around for 30 years. They became popular among lawmakers in many states at the beginning of the century, and Nevada waded into the game in 2013. Today, the National Conference of State Legislatures reports, 35 states offer financial incentives to lure film and TV production.
Problem is, a significant amount of academic literature — produced by those across the political spectrum — finds that the bang is rarely worth the buck. Consider:
— A 2016 study by the USC Price School of Public Policy found that “the benefits” of state programs intended to attract TV and film production “are almost non-existent.”
— A 2010 paper by the left-leaning Center for Budget and Policy Priorities determined that, “Like a Hollywood fantasy, claims that tax subsidies for film and TV productions … are cost-effective tools of job and income creation are more fiction than fact.”
— The Hartford Courant reported in 2022 that Connecticut’s incentive program showed losses of nearly $80 million a year from various film, TV and digital media credits.
“The states that have performed evaluations of their film tax incentive programs,” NCSL noted last year, “have commonly found that, despite the positive anecdotal evidence that accompanies big film projects, such programs do not provide a substantial return on investment and, if economic development is the goal, other policy avenues might be more productive.”
SB496 dropped with just weeks left in the session, which means abbreviated debate. But perhaps that’s the point, given proponents have so little evidence that their proposition will be the economic panacea they advertise.