Two studies released this week conclude that billions in state handouts for the film industry won’t generate enough revenue to cover the taxpayer cost. The only surprise about the findings are that anyone would be surprised.

Star-struck supporters of the subsidies in many states — representing billions of dollars, largely in the form of “transferable” tax credits — claim they will diversify states’ economies while ultimately generating tax revenues far in excess of the taxpayer “investment.” They have the support of construction and other unions looking to tap that big pot of cash, along with Hollywood interests with their tin cups out.

But like most deals in which government central planners pick economic winners and losers with somebody else’s money, the numbers rarely add up. According to studies on proposed incentives for the film industry in Nevada, a state Senate bill would generate only 35 cents of state and local tax revenue for every $1 in tax credits. Its counterpart in the lower house would generate just 52 cents. Notably, the reports also calculated that both bills would create far fewer jobs than backers of the plans maintain.

None of this should be a shock. The Nevada bills’ sponsors and others disputed the studies, of course, preferring instead to shoot the messenger. Yet they’ll need to keep reloading because the literature is remarkably clear on this issue: State film tax credit programs almost never deliver the promised goods.

Take your pick: A 2016 USC analysis declaring that the “benefits” of such subsidies “are almost non-existent,” a 2022 review which found that Connecticut’s program lost about $80 million a year or a 2010 paper from the Center for Budget and Policy Priorities concluding that the idea of tax subsidies for film and TV productions being “cost-effective tools of job and income creation are more fiction than fact.”

There are many others. Even Georgia’s much-ballyhooed program, which has lured scores of motion picture and television productions to the state, is a money loser, according to a 2023 audit, costing state taxpayers about $160,000 for every job created.

Those touting handouts for Hollywood have been promising the yellow brick road. A more likely scenario is a remake of “The Money Pit.”

— From Tribune News Service