VICTOR JOECKS: The failure of film tax credits

In the movie “Rounders,” Mike McDermott, played by Matt Damon, says, “If you can’t spot the sucker in your first half hour at the table, then you are the sucker.” What a perfect description of the push for Hollywood handouts.

The effort to dole out around $1.5 billion in transferable film tax credits continues. Gov. Joe Lombardo has said that he will call a special session, but he hasn’t specified the agenda. Think about the absurdity of this. The governor claims there is something so urgent that it requires calling lawmakers back to Carson City, but it isn’t urgent enough to explain the details to the public. That looks like cowardice, not leadership.

Operating in the shadows makes it harder to organize the opposition. And there’s good reason for film tax credit supporters to fear open debate. Similar schemes around the country have cost taxpayers dearly. Georgia has long had a massive film tax credit program. It loses around 80 cents out of every dollar it spends.

First, you need to understand that transferable tax credits aren’t just an exemption from paying current taxes. They can be sold to other businesses for cash. Yes, this resembles legalized money laundering. Functionally, this process turns transferable tax credits into taxpayer subsidies.

The argument for this policy is that handing out money to Hollywood will bring more film productions to Las Vegas. That’s likely true, but so what? If it started handing out cash, the state of Nevada could lure almost any type of business.

In theory, major tax incentives should pave the way for a permanent industry to develop. That happened with Tesla in Northern Nevada. Allegiant Stadium hasn’t prevented a dip in tourism, but it has drawn major events to Southern Nevada.

Film tax credit supporters claim the same thing will happen here. Although the exact language of the proposal remains to be seen, it appears the film tax credits wouldn’t be available until after an initial $400 million investment by Summerlin Studios.

But there are a couple of key differences. First, the Gigafactory is permanent. Other companies have moved to or expanded in Northern Nevada because they know it isn’t going anywhere. When people attend major events, they need to go to a specific location, such as Allegiant Stadium. But movies can be filmed all around the world even if a studio is built in Las Vegas.

Just look at Georgia. Production spending there has plummeted by nearly 50 percent over the past three years. Why? The United Kingdom offers a similar tax credit, and its labor costs are lower. New film projects are headed overseas.

Second, these Hollywood handouts are likely to be far more generous than those Tesla received. Its 2014 incentive package was worth $1.3 billion, but included only around $200 million in transferable tax credits. Tesla received $1.1 billion in tax abatements, which means it didn’t have to pay certain taxes. It also had to invest $3.5 billion — not a measly $400 million.

Look out taxpayers. Lombardo and other Hollywood handout politicians are the suckers at the poker table — and they’re playing with your money.

Contact him at vjoecks@reviewjournal.com or 702-383-4698. Follow @victorjoecks on X.