Speaking of subsidies to service industries, as we were recently, the Economist recently had a good piece on U.S. state subsidies to support filmmaking:
All but seven of America’s 50 states now offer incentives to lure filmmakers. Some states refund a portion of in-state production costs, which may include actors’ salaries. Others issue rebates against state taxes that can be sold to local residents. The club is growing quickly. California, which resisted subsidies for years, recently approved its first clutch of recipients. Kentucky is considering its first application.
So, is this a good strategy for the states?
The continuing bidding war is likely to result in diminished returns for the states. Michigan’s subsidies, once considered improbably lavish, may soon be matched by Washington, DC. Alaska has approved a 44% rebate, although production companies must film in rural areas during the state’s gruelling winter to qualify for the full sum. Whatever the benefit to the states, however, the subsidies are becoming ever more important to Hollywood.
It seems to me that if everyone is subsidizing, the main beneficiary will be the film companies, whose costs are now much lower. The states will end up in the same position, only with less revenue. Perhaps, then, they would be better off if they just agreed not to subsidize anymore.
Of course, the problem is, the first movers in this kind of subsidy battle may get an advantage:
As a result, it is very difficult to come up with effective disciplines here. That's not to say it isn't worth trying, though.Some of the first places to offer rebates, such as New Mexico and Louisiana, now have impressive sound stages and a deep pool of production workers.
