The Louisiana
Film Entertainment Association has announced plans to commission
a study on the economic impact of the state’s motion picture investor tax
credit. Since its inception in 2002, the program has seen over $1 billion
dollars go out the door in lost collected tax revenues as a result, which comes
as a result either of exercising these credits or, as what occurs with the vast
majority of dollars involved because the awardees of them almost always are
from out-of-state and owe little Louisiana tax liability as a result of making
a movie, selling them to Louisianans with high state tax burdens (including state
elected officials).
Through
2012, the state had only gotten back about $120 million, in terms of
additional tax revenues recouped, of the $800 million that had been then paid
out, or just 15 cents on the dollar. That meant that each
direct job created by the program cost the state $36,000, which is hardly
cost effective. In other words, from the start the program has served as
nothing more as a conduit of the people’s money to a handful of individuals –
many of them nonresidents – to pay them to do what they want to do, not for
investing in what was most efficient for the maximal economic development of
Louisiana.
But these wealthy folks don’t
want their gravy train to end, and that’s part of the reason the LFEA exists,
to lobby to keep things rolling for them. And given that, unlike almost every
other tax exception that exists in the state, the law requires that on a
biannual basis a report is produced analyzing the cost effectiveness of the
program (which is why it’s known how wasteful it is) and the next edition of it
is due out in 2015, the industry is trying to get out ahead of that by coming
up with its own report to counter the expected dismal return that once again will
be found.
The past reports (which are not
catalogued in an organized fashion on the Internet but with patience may be
discovered; the latest is here)
are perfectly adequate methodologically, which is what worries the group because
these validly describe what a lousy deal for taxpayers the film credits are.
So, the group states that its goal with its own effort is widen the scope on
what counts as return on investment, even as it claims it wants a “good, honest
study, not skewed in our favor.” But there’s nothing wrong with the existing
efforts, so it’s clear that the group is trying exactly to skew the results in hoping
to show the credits are less cost ineffective than they really are through
changing the definition of return on investment.
And it’s a tossup about whether
this is more laughable or more a crass demonstration of chutzpah, but the group actually wants the larger public to fund
the effort. Incredibly, an organization that represents those who have been
paid, directly or otherwise, hundreds of millions of dollars representing
taxpayer money want to engage in crowd sourcing to pay for such a study. I
guess once you’re used to sticking hands into people’s pockets for a living, it’s
hard not to think they won’t pony it up on their own.
The reason these interests are
skittish is that the 2015 session is one where reductions or eliminations of
tax credits constitutionally may occur, and as the state continues to endure
tight budgetary times, seeing a net loss of $168 million or so as of the last
(2012) reported year, an amount that has continued to grow with each report,
may tempt policy-makers to stop the bleeding. While next year is an election
year, which usually gives legislators feet of clay in pursuing anything that
even smells like a tax increase of any kind, that the benefits of this are so
concentrated in the hands of a few and to just a few areas of the state while the
costs are spread widely actually may give state representatives and senators
the courage to buck the few but politically active in support of the many who
vote.
In the interim, let’s see what
kind of gymnastics get employed by the industry’s representatives to fool us
into thinking, despite the overwhelming evidence to the contrary, that allowing
them to live off of us benefits us more than them.
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