$1.65 Billion Hollywood Tax Giveaway Approved, and It's a Shame
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The moguls of Hollywood are laughing all the way to the bank today as Gov. Jerry Brown signed into law a tax giveaway for film and television production that will take $1.65 billion of your hard-earned cash and give it to producers over a 5-year span.
The idea is to attempt to keep film production from fleeing to states with bigger, better tax giveaways, although there's little evidence that the credits work, and there's a lot of evidence that Hollywood continues to play states against each other to the enrichment of its own entrepreneurs.
Brown signed the bill, co-authored by Assemblyman Mike Gatto of Northeast L.A. and Assemblyman Raul Bocanegra of the northeast Valley, in the presence of Hollywood booster Eric Garcetti, L.A.'s mayor.
Senate President pro Tempore-elect Kevin de León of L.A., who negotiated the final language with the governor's office, said:
This legislation will keep the cameras rolling in California and strengthen our position as the creative Capitol of the world. We’re bringing Californians who are working away from their families in Georgia and Louisiana back to California where they belong.
But the state's own Legislative Analyst's Office analyzed the state's film tax credits (previously limited to $100 million a year) and concluded that they don't pay for themselves in additional tax revenue for California's coffers and that their "economic benefits" have been "overstated."
The office also said that throwing cash at Hollywood promotes a "race to the bottom" against other states, a race that might not change the landscape of production but that would enrich producers.
Richard Florida, an expert on economic development incentives at the University of Toronto, studied the effects of such tax credits and concluded they have no impact on the big-picture economics of a region:
We found no statistically significant association between economic development incentives per capita and average wages or incomes; none between incentives and college grads or knowledge workers; and none between incentives and the state unemployment rate.
Yeah. We've also brought up the issue of diversity more than once.
Latinos represent California's largest ethnic group and comprise about half the L.A. county population yet see less than 5 percent of film speaking roles. A UCLA study earlier this year found that key behind-the-scenes job categories, including writers and agents, are nearly 90 percent white male.
Meanwhile, Latinos are over-represented at the box office. They buy about 1 in 4 tickets nationwide.
In essence, we're subsidizing a community that doesn't like us, doesn't hire us and doesn't respect us. And by us I mean the biggest ethnic demographic in the state and in the city that Hollywood calls home.
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But it's a no-brainer for a politician like Garcetti to stand up for a hometown industry like Hollywood and spend other people's money, in this case the state's. There's nothing to lose, and the mayor can claim he's helping to create jobs, which is debatable.
Garcetti had this to say today:
They call the problem 'runaway production.' But let's be clear — production and production jobs aren't running away from California. They are being lured away by big financial incentives from other states. Today, we fight back.
And you know what? They'll come right back at us with more incentives of their own. Hollywood will be swimming in tax money at a time when our roads are falling apart, our schools are in disrepair, and attending the University of California cost three times what it did a decade ago.
In fact, Hollywood lobbyists, the same folks who begged you for your money, are asking for other states to pony up more of their own tax dollars as we speak.
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