If you live in California, you are getting mauled by taxes, some of the highest in the country.
But don’t worry, a huge share of those taxes are being funneled to one of the most powerful bastions of leftism in America — Hollywood film companies.
As Scott Shackford of Reason explains, the upcoming film Space Jam 2 will reap as much as $21.8 million in tax credits from the state. Shackford notes, “The Los Angeles Times notes that it’s the second largest grant from the program, which is currently scheduled to sunset in 2025. The Transformers spinoff, Bumblebee, which will no doubt be a fiscally successful, narratively incomprehensible car crash of a movie, was granted up to $22.4 million in credits.”
Continuing, Shackford notes that the California Film Commission is now enriching film companies to the tune of $330 million per year in credits, tripling the $100 million a year from previous years after it was increased in 2016 to head off producers from migrating to other states.
The Los Angeles Times wrote in June:
In a major win for the local movie and TV production industries, California has extended the state’s film tax incentive program to 2025, adding five years to the program that has helped stem the tide of runaway productions to states including Georgia, Louisiana and New York. The measure, which was part of Gov. Jerry Brown’s $201.4-billion budget plan that was signed Tuesday, will maintain the $330 million in annual tax credits handed out to selected productions. But it includes more tax credits for independent films and additional incentives for projects that hire labor outside the 30-mile radius around Los Angeles.
Shackford notes Times writer David Ng’s evident reluctance to tackle the question of whether the tax breaks are genuine job creators for Californians. He states that Ng writes that tax breaks can pay for crew and set production but not for star salaries or high-end compensation. Shackford writes, “But this is an absurd claim. Money and budgets are fungible creatures. If Warner Bros. knows that they’re going to recoup $21.8 million in expenses on crew, that inherently frees them up to offer more money to LeBron James to lure him in to pretend to play basketball against a dude in a motion capture outfit that will eventually be animated to become a space monster. This program does, in a roundabout fashion, subsidize the costs of stars’ salaries.”
Bigger film companies gain a large share of the windfall, winning 35% of the available funding, while independent films are limited to 5%.
Citing Rep. Justin Amash’s (R-MI) explanation about the deleterious effect of tax credit deals, Shackford writes, “massive tax breaks for major movie blockbusters do not benefit the citizens of California when the state is drowning in debt and pension commitments and leaders are openly looking for mechanisms to try to extract even more money from everybody else.”
The California Film Commission notes on its website: “The California Film Commission administers the Film & Television Tax Credit Program 2.0 which provides tax credits based on qualified expenditures for eligible productions that are produced in California. The $1.55 billion program runs for 5 years, with a sunset date of June 30, 2020. Each fiscal year – July 1 to June 30 – the $330-million funding is categorized in: TV Projects, Relocating TV, Indie Features, and Non-Indie Features.”