MPAA Slaps Back at Film Tax Incentive Study

The Center on Budget and Policy Priorities argues film jobs don't pay for lost tax revenues, but trade group says that's not so

The Motion Picture Association of America is hitting back at a new report from a Washington-based think tank that is harshly critical of states' use of production tax incentives.

In the study released on Wednesday, the Center on Budget and Policy Priorities argues that incentives don't create enough new jobs to justify the loss in tax revenue.

It noted that facing budget shortfalls, several states, such as New Jersey, are suspending their programs.

Where one organization sees the incentives as a boondoggle, the other labels them an invaluable economic stimulus.

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The MPAA, one of the biggest boosters for film tax credits, questioned the accuracy of the report's findings and suggested that the center was prejuidicial towards tax credits.

"This politically motivated, slipshod report by a think tank in Washington, D.C., demonstrates no understanding of the film and television industry, nor the importance of the jobs and economic development produced by these tax credits in states all across our nation,” said Vans Stevenson, senior vice president of state government affairs at the MPAA.

In addition to wars of words, the two organizations also launched a battle of empirical evidence.

The center said that subsidies have minimal impact on state economies, because film makers usually reerve the best jobs for highly paid talent brought in from other states, while giving part-time work to in-state residents.

Further, the report noted that a recent study by the Massachusetts Department of Revenue — a state that has bet heavily on subsidies — found that the state lost $88,000 in tax revenue for every new job created by the program.

The MPPA countered that the film and television industry supports more than 2.4 million jobs and generates about $13 billion in taxes and $40 billion in payments to vendors, suppliers and others nationwide.

Regardless of the merits of their relative arguments, tax credits have become an increasingly contentious issue recently. Some states such as Louisiana and New Mexico have had enormous success in attracting Hollywood productions, but others such as Iowa have shuttered their programs following high-profile scandals about the way funds are administered.