Lights, cameras, moolah: Taxpayers lose on 2015 film incentives

By   /   January 6, 2016 / www.MississippiWatchdog.org

Filmmakers received nearly $4 million in incentives from Mississippi taxpayers to bring their productions to the Magnolia State, but state taxpayers don’t benefit from the Hollywood glitz, according to records obtained by Mississippi Watchdog and a reportby the state Legislature.

The $3.9 million in incentives for movies and TV shows doled out in 2015 was by far the biggest outlay in the past four years. In 2014, the state rebated filmmakers more than $891,000 in taxes after crediting them $1.2 million in 2013 and $1.4 million in 2012.

The state Legislature’s PEER Committee (Joint Committee on Performance Evaluation and Expenditure Review) released a report in December about the Mississippi Film Office’s effectiveness, noting Mississippi loses 51 cents for every dollar spent on the film incentive program and that money would be better spent on incentives for manufacturing. The figure was calculated based on incentive outlays compared to the jobs and economic activity the film projects have reaped. The program, according to the report, created 1,094 direct and secondary jobs in fiscal 2015, or a cost of $3,575 per job.

Related: Lights, cameras…action? Mississippi paid filmmakers fewer tax incentives in 2014

Ward Emling, director of the Mississippi Film Office, said the number of productions has increased thanks to some relationships built by his office. He said the state’s incentive program is extremely competitive both with other states and internationally.

“We’ve had a lot of production here,” Emling said. “We’ve had filmmakers we’ve worked with before and talked with a lot over the years and finally, everything worked. We don’t see it changing. Our incentive is pretty close to Louisiana and Georgia, when you look at the cash value of the incentive.

“There’s always been competition among the states and then among countries. Before there were incentives, we competed on locations. Now we compete on local crew.”

Economist Matthew Mitchell, program director for the Project for the Study of American Capitalism at the Mercatus Center at George Mason University, said these incentive programs are simply a transfer of wealth from taxpayers to a politically connected industry.

“The goal of these incentives is transfer resources from the politically unorganized to the politically organized,” Mitchell said. “The real goal is to benefit a narrow special interest group — film producers — who (are) by the way among the wealthiest people in the country. The idea that it’ll bring prosperity to others beyond that industry doesn’t make sense when you think about the math.”

Related: Another reason to yell “cut” on New Mexico’s film subsidies

The state’s film incentive program — administered by the Mississippi Development Authority and created by legislation in 2004 — gives filmmakers tax rebates of up to $10 million on a project filmed in the state. There are also rebates available on sales and use taxes on eligible rentals and purchases.

Each fiscal year, the film rebate program has a cap of $20 million with a deadline of June 30 for filmmakers to submit their applications for subsidies.

Filmmakers must spend at least $50,000 in Mississippi, employ 20 percent of the production crew from the state and display the Mississippi’s film office logo in the closing credits.

Mitchell also has an issue with the practice of building an industry with subsidies, especially when film production companies have little infrastructure and can move at any time.

“The strongest argument against it (film subsidies) is the most important point in economics, which is that regions prosper when they specialize based on their comparative advantage, based on those things they are good at doing,” Mitchell said. “With enough subsidies, you could get oranges to grow in Maine.

“There’s nothing fundamental about growing oranges in Maine, but blueberries grow well in Maine. Not oranges. The last thing a state wants to do to achieve prosperity is subsidize an industry that would not be there without a subsidy. These subsidies are an admission that a state is not well suited for that industry.”

Related: Film subsidies trap Maryland taxpayers in ‘House of Cards’

State of Mississippi photo

The logo of the Mississippi Film Office

Mississippi is one of 32 states to offer tax incentives to filmmakers and competition to lure production has intensified, especially in the South. Louisiana has a 35 percent transferable tax credit for filmmakers, while Georgia has a 30 percent tax creditAlabama andTennessee both offer 25 percent tax credits, while Florida offers credits varying from 20 to 30 percent. Arkansasoffers a 20 percent incentive.

Some states are scaling back their incentives. Since 2010, 15 states have either reduced or scrapped their incentive programs, including most recently, Michigan, in July.

According to data provided by the Mississippi Department of Revenue, these productions received state incentives in 2015:

  • Five Men Live — $44,773.18
  • Midnight Special — $208,955.20
  • The Livingston Gardener — $28,655.77
  • Battlecreek — $309,493.93
  • Forced Move — $16,641.60
  • A Gift Horse — $40,334.79
  • Swamp (Swamp Hunters) — $68,221
  • Local News — $56,226.26
  • Same Kind of Different as Me — $2,650,780.14
  • Gulf South Outdoors — $34,880.37
  • The Gift — $22,823.06
  • Dixieland — $55,051.24
  • Preacher Man — $14,629.00
  • Race of A Lifetime — $123,412.02
  • Mississippi Grind — $19,805.90
  • The Lake Movie (Shark Lake) — $217,338.51

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