The nine films nominated for best picture Oscars have more in common than just the accolades they’ve earned. Every one of them also scores high marks when it comes to garnering subsidies from the public.
The libertarian Manhattan Institute reported Monday that five of the nominees -- “The Wolf of Wall Street,” “Her,” “American Hustle,” “Twelve Years a Slave” and “Dallas Buyers Club” -- collected state tax credits of 20% to 35% from, respectively, New York, California, Massachusetts and, for the last two films, Louisiana. For “Wolf,” the institute estimated that New York’s production tax credit covered up to $30 million of the film’s $100-million budget.
As my colleague Richard Verrier so ably explained in a recent piece on tax-credit middlemen, producers typically sell their credits to investors because they don’t generate big tax bills in the states where they film. That means they don’t collect the full value of the credit -- to find buyers, they have to sell them at a discount. From the taxpayers’ perspective, though, every penny of credit is a penny of tax revenue that has to be made up elsewhere. (More on this in a bit.)
A sixth production, “Captain Phillips,” collected a $300,000 grant from the state of Virginia, the institute reported. A seventh, “Nebraska,” is eligible for help from local programs in the titular state. And the remaining two -- “Gravity” and “Philomena” -- collected tax credits of 20% to 25% from Britain.
The institute is no fan of subsidies for the movie industry, which it views as fiscally unjustifiable. “Similar to most targeted tax breaks, movie production incentives routinely fail to deliver on the economic promises made by their proponents,” it argued Monday. “Supporters frequently claim movie incentives create jobs and lead to net gains in tax revenue. However, data from several states find movie production incentives generate less than 30 cents for every lost dollar in tax revenue.”
That’s putting too negative a spin on it. The economic value of the credits varies from state to state. For states with no native movie business, a film shoot is something like a convention that brings a bunch of visitors into town. They spend money on food, lodging and supplies, injecting a bunch of dollars into the local economy. And then they leave. The tax credits mean that some of those new dollars will actually be provided by state taxpayers. But all the dollars spent by the film crew, even the ones that effectively come from state taxpayers, are taxed to some extent through levies on sales and income.
For states that do have a native movie business, such as California and New York, the calculation is a bit more complicated. There, the credits are subsidizing activity that might have taken place anyway. Or not -- it’s really hard to tell nowadays, considering how easy it is for producers to plant crews wherever the financial environment is most inviting. There’s also the question of what the workers being subsidized would do if there were no subsidies. Would they be idle? Would they go to where films were being made? Or would they put their skills to use in a non-subsidized industry, which would make the subsidies even harder to justify economically?
In other recent work, Verrier has noted the 20-year exodus of filmmakers from California, which the latest round of Oscar nominations underlined. “The state barely registered in the Oscar contest, at least when it comes to film locations, underscoring the difficulty California faces in keeping its homegrown industry from fleeing the state,” he wrote.
Just look at the nine best-picture nominees. They could have been filmed anywhere (or, in the case of “Captain Phillips,” anywhere with a port and an ocean). Yes, the artistic needs of a story have to be served; a road movie like “Nebraska” can’t be filmed entirely on a sound stage. But as the likes of “Gravity” and “The Dallas Buyers Club” demonstrate, filmmakers have a powerful incentive to find a way to serve those needs in a locale picked by their accountant.
Maybe it’s just a matter of time before the motion picture academy starts offering a statuette to the producers who make the most footage on the taxpayers’ dime.