Another Film Tax Credit Report Ignores Economics

In its analysis of Pennsylvania’s motion picture and television industry the Three Rivers Workforce Investment Board pins down the creation of jobs and increased wages in the film industry to the Film Tax Credit (FTC). The report adds, “the key element driving producers to the Commonwealth is the Film Tax Credit.”

Yet, in the study they list competitive advantages to filming in Pennsylvania, such as proximity to New York, the lower cost of production and a large number of temporary workers – indicating that producers will come to the state regardless of the tax credit. To be sure, an overwhelming majority of the films produced in the state do not receive the tax credit.

Although the authors say that 9,785 jobs were created due to the tax credit, their own report outlines a decline in film employment since the creation of the FTC.

Most importantly, they fail to consider how the money could have been used otherwise. The FTC could have been used instead to lower taxes across the board, rather than a carve-out for one industry. Yes, lower taxes might attract businesses, but there is no reason to think that the film industry is unique, or even more responsive to a tax break. Hence, there is no economic justification for imposing higher taxes on everyone else while favoring Hollywood.

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