California Report Confirms That Tax Giveaways to Hollywood Are a Waste | The Informer | Los Angeles | Los Angeles News and Events | LA Weekly

California Report Confirms That Tax Giveaways to Hollywood Are a Waste

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Mon, May 5, 2014 at 7:03 AM
Politicians, including state Assemblyman Mike Gatto and L.A. Mayor Eric Garcetti, have been falling over themselves to give your hard-earned tax dollars to the billionaire-controlled mega-media industry we call Hollywood.

See also: Should White Film Industry Titans Get a Tax Break as They Fail at Diversity?

Their argument is that tax breaks keep production in California, lead to jobs, and ultimately pay themselves off with revenue generated by all this business activity. A new report from the state Legislative Analyst's Office concludes that the industry doesn't really return the favor when we give it our money, though.

According to a summary, ...

 " ... The film tax credit does not 'pay for itself.' 

Regarding the always dubious analysis of the L.A. Economic Development Corporation, which claimed that every $1 in California film tax credits returned as much as $1.11 in state and local revenue, the Legislative Analyst calls b.s.

"The analyses used to support the film tax credit vastly overstate their findings," the report, released last week, says. The office estimated that revenues returned were more like .65 cents on the dollar.

"It is incomplete - and, arguably, not accurate - to claim that the tax credit program pays for itself based on the LAEDC data," the report sings. "The state government receives far less revenue back than it spends on the tax credit ... "


A proposal by state assemblyman Mike Gatto and Raul Bocanegra would expand the state's film tax credit so that California can compete with the likes of New York, which the two say has been stealing productions away from L.A. 

New York offers up to $420 million a year in tax subsidies, while California gives away $100 million, mostly to indie, smaller budget films with budgets of $1 million to $75 million.

The bill seeks to expand the amount of cash we give away to media moguls so we can attempt to match New York's lure.

Critics have argued that these taxpayer giveaways don't work however, and some have questioned why we would give money to an industry that has failed year after year to diversify its workforce, especially in a city that's half female and so-called majority minority.

Those good jobs Hollywood generates always seem to go to Anglo men. Some key facets of Hollywood, including directing, writing and major agency work, are about 90 percent or more white-male.

And we've noted that, while film and TV pay excellent wages, the rest of us chip in for the high cost of living in Los Angeles. Rent and real estate is simply out of control, partly because Hollywood incomes sustain them. But we don't all have Hollywood incomes.

Why would we want to give more of our money to these people?

See also: Local Film Industry Is Healthy as Hollywood Begs for Taxpayer Cash

The Legislative Analysts Office is asking some of the very same questions. It says that continually offering tax breaks constitutes a race to the bottom: As other states increase their concessions the result is that we spend more of our cash but end up with the same result:

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