Hollywood Seeing Large Tax Breaks

BALTIMORE: An Associated Press survey found that states competing for projects awarded $1.8 billion in tax breaks, among other advantages, to the entertainment industry from 2006 through 2008.

The argument is that either the tax breaks pay for themselves in revenue, or, even if tax revenue takes a hit, the film industry bolsters states’ economies with an influx of cash and jobs.

The AP surveyed 41 states, plus the District of Columbia, that offer rebates, grants or tax credits to cover production costs for movies, TV shows and commercials, and found they committed $1 billion last year alone. New York gave away or pledged $275 million in tax credits in 2008 to productions that shot in the state that year. New York said the money boosted the state’s economy with $2.2 billion in direct spending. Louisiana, one of the biggest incentive states, pledged an estimated $358 million in tax credits to filmmakers between 2006 and 2008, including $27 million for last year’s Academy Award-winning The Curious Case of Benjamin Button.

On the flip side, many economists and policy analysts say that the tax breaks for the TV and movie industry are seldom break-even deals for states, in part because the jobs created are often short-lived.