Budget / Featured / Taxes

Guest Commentary: Report Confirms Wastefulness of Louisiana’s Media Tax Credits

PrintFriendly and PDF
Buried in the report: 14 cent return for every dollar of corporate welfare

Even stopped clocks are right twice a day. Though they place greater priority on spending for spending’s sake than on promoting efficiency and right-sizing government, the collectivists arguing for more tax increases – that would cause even fewer people to pull a wagon with more people on it – are right about one thing: the state tax credit giveaways to film, theater, sound, and interactive media are a waste bar none.

Every couple of years the Louisiana’s Department of Economic Development comes out with a report on the impact of those credits, with the latest attempt being unveiled yesterday. It’s always the same song and dance that breathlessly is publicized, focusing mainly on film since about 99 percent of the credits dispersed are in that area – jobs created (in film by the latest 2009 computations, assuming all activity is as a result of the credits, about 4,471), economic impact in varying degrees of directness ($592.6 million), and economic value generated for each dollar in credits ($5.59).

But hidden in the report, and what you never hear from the LED propagandists and their allies in the industry, because it’s required by the law that is the report’s impetus, is the tax dollars, local and state, actually generated by the credits and how much the credits cost. In 2009, the pattern from the start of the program continued: $24.8 million in additional taxes, $182.4 million going out in lost revenue through credits, or a net loss of $157.6 million. For every dollar going out in corporate welfare of taxpayers’ money, they get back about 13.5 cents. The remaining three credits produced net losses combined of about $500,000.

This parallels Louisiana’s past experience and that of every other state that gives money to make more (mostly inferior) movies. And it doesn’t even include the cost of lost economic activity due to the distortion inflicted upon the state’s economy. These tax advantages subsidize profoundly unproductive activities instead of allowing money to flow to those of better use.

The madness continues. No legislative effort to date for this year’s session has appeared to stop it by cancelling these programs. Even more money gets spent on luxurious travel and dining by the high-priced bellhops who inhabit the LED trying to shill these black holes of taxpayers’ resources. The bright lights of Hollywood continue to blind the rubes in state government to the sacrifices they impose on Louisianans to perpetuate these unsustainable programs.

Jeffrey Sadow is an associate professor of political science at Louisiana State University, Shreveport. The original version of this article first appeared on Sadow’s blog, “Between the Lines.”