EDITORIAL-Entertainment Industry Tax Breaks A Viable Support Of California's Economy
By Assemblyman Cameron Smyth
The California Film and Television Tax Credit has proven to be a wildly successful case of the state working with businesses to keep jobs (and over $2 billion in direct spending) right here in California. But not all critics are impressed.
Prior to the Film and Television Tax Credit, “runaway production” had cost California over 10,600 jobs in film, TV and commercial production, and more than 25,000 related jobs, according to a report by The Milken Institute, a nonprofit economic think tank.
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Unfortunately, taking our allies of commerce for granted is not a new attitude. The flight of film production, like so many other industries, is part of a distinctly Californian trend. To illustrate, forty years ago California was the hub of our nation’s aerospace industry. Thousands of Californians—with varying skill sets and education levels—could count on on well-paying, high quality aerospace jobs. Twenty years later, my friends and I grew up believing that we would have similar job opportunities in the entertainment industry.
But as California now struggles to maintain its place as the country’s entertainment capital, history threatens to repeat itself. Businesses and jobs are again chased away by our state’s overly aggressive regulatory environment, high taxes, and growing competition from other states. The promise of both industries remains endangered.
To battle this trend, legislators from across the state came together in 2009 and passed legislation to re-energize the film and television production industry. In fact, it was more successful than any of us imagined.
In the past two years, the California Film Commission has allocated about $300 million in tax credits to 100 projects. These incentives have brought in an estimated $2 billion in direct spending to California communities, including $736 million in wages paid to “below-the-line” crew members (electricians, grips, drivers, costumers), according to data compiled by the Film Commission.
That’s 18,200 crew and 4,000 cast members hired by the approved projects. An additional 113,000 individuals will be employed on a day-to-day basis as background players. This includes dry cleaners, caterers, florists, and construction workers, among many other neighborhood businesses in our communities.
The Los Angeles Times recently hailed aspects of this program as the “model for how the Legislature should approach corporate tax breaks.”
But as any artist knows, critics, by trade, will always find something to criticize.
Dan Morain, editorial writer at the Sacramento Bee, recently suggested that the film and television tax credit remains popular largely due to the “well-orchestrated lobby effort” put forth by “organized labor” and “[e]ntertainment conglomerates.” These subsidies, Mr. Morain continues, move us closer to tax hikes, classrooms and welfare cuts, and—by an argument noteworthy for creativity—a step backwards for the anti-smoking movement (as tax credits may go to films that “glamorize smoking”).
Suggesting that a widespread lobby effort is necessary to convince the lawmakers to maintain a quantifiably successful jobs program is a tough sell. It is equally a stretch to argue that California’s budget woes are gravely worsened by the Film Commission’s measurable and substantial return on investment. And of course, Mr. Morain’s public health criticism is as immaterial as his subtle derision towards the light-hearted films the credits supported. A film job is still a job, regardless of whether its award statue reads “Razzie” or “Oscar.”
Finally, Mr. Morain points out that Iowa and Missouri are both questioning their film credit programs; in the latter case due to the credit serving “too narrow of an industry.” Thankfully, film and TV production is not a narrow industry in California. In this competitive market we should now, more than ever, stay the course and bring the jobs home.
This tax credit is one of many ladders to help our state climb out of the fiscal ditch we have dug for ourselves by pushing away businesses and jobs.
Expanding the breadth and longevity of the Film and Television Tax Credit is a necessary step to ensuring this industry continues to thrive by investing our world-class workforce.
This editorial originally appeared on the Fox and Hounds Daily website.