Coming, oh so slowly, out of ‘the Great Recession’ it is tempting to look to government action to jumpstart economic growth. Nearly all advocates for new spending and taxing add a tag line to their arguments. “It’s good for the economy. It will create jobs.”
That’s the argument for Georgia to bid film production away from California, North Carolina, British Columbia and elsewhere. The production companies will move here, build studios as ‘permanent investment and give Georgia jobs and tax revenue.
But will they? We forget about the counter-offers, promising new and enhanced film tax credits. In the end, money is transferred from the taxpayers of the state that offered the highest kickback to the investors in the production company. Taxpayers in Georgia are paying kickbacks to investors in Hollywood…and, perhaps, to California’s spendthrifts in Sacramento.
These tax credits are investments in private companies that are made by our elected officials using our tax money. My students worked for a whole semester analyzing the economic effect of these investments. The promises of new jobs are inflated. Sometimes wildly so.
We must hold film companies, legislators, anyone who wants to tap the taxpayer’s pocket to the same high standards of proof that we hold private investors. If these incentives will really promote the welfare of regular Georgians, they should prove it. Not just do it and expect the media and tax reform proponents to disprove it.
Rather than lower taxes for one type of taxpayer and raise them for others, we should eliminate incentives, put the gained revenues into a big pot and use the pot to lower income tax rates for all taxpayers. Now that will help the economy
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