After practically 20 years, Georgia lawmakers have proposed slicing again on the state’s beneficiant tax credit for movie and TV productions, however the proposed cuts are a lot too meager to make a distinction.
Georgia’s entertainment tax credits have been in place since 2005. A movie or TV challenge can qualify for a 20 p.c tax credit score, plus an extra 10 p.c if the ultimate product features a “Made in Georgia” emblem. A manufacturing firm should spend at the very least $500,000 within the state to qualify. The beneficiant subsidies led to a growth in manufacturing, main Atlanta to become the “Hollywood of the South.”
This week, Lt. Gov. Burt Jones, Home Speaker Jon Burns, Senate Finance Chairman Chuck Hufstetler, and Home Methods and Means Chairman Shaw Blackmon—all Republicans—announced plans to lift the minimal required funding from $500,000 to $1 million, in addition to requiring extra effort to qualify for the additional 10 p.c. (At present, a film or TV present can get the additional bump simply by together with a peach emblem ultimately credit.) The announcement got here practically a yr after Jones and Burns said that they might “evaluate of all Georgia tax credit, together with Georgia’s movie tax credit score” as a way to “ensur[e] a big return on funding for Georgia’s taxpayers.”
Opinions are divided on the credit’ effectiveness—specifically, divided between the movie trade and monetary auditors. Final yr, a examine underwritten by the movie trade and its advocates concluded that the tax credit had been a boon for the state’s financial system, boosting not simply the “manufacturing sector” however “the general local weather for enterprise improvement.”
However auditors persistently sing a distinct tune. A 2020 audit by the Georgia Division of Audits and Accounts discovered that “the financial exercise generated by the movie tax credit score doesn’t generate adequate extra income to offset the credit score, even after contemplating tourism and studio development.” In 2016, for instance, the state disbursed over $667 million in tax credit which “resulted in a web income loss to the state estimated at $602 million.”
A 2023 audit by Georgia State College concluded that the tax credit value taxpayers simply over $160,000 for each job created. It calculated that this system at the moment spends over $1.3 billion per yr with a return on funding of simply 19 cents per greenback.
Based mostly on these numbers, then, it is disappointing for lawmakers to suggest such meager modifications to this system.
J.C. Bradbury, an economics professor at Kennesaw State College, tweeted that altering the minimal required funding from $500,000 to $1 million would “have about as a lot impression on decreasing the taxpayer burden of movie tax credit as elevating the minimal wage to $7.26/hour [from its current $7.25] would have on the labor market.”
Certainly, lots of the largest beneficiaries of the tax credit score—together with franchises just like the Avengers and Starvation Video games movies—value lots of of hundreds of thousands of {dollars} to make and earn significantly extra on the field workplace.
Notably, most manufacturing firms aren’t based mostly in Georgia and due to this fact pay little or no in Georgia taxes. However because the credit are transferable, an organization can promote its credit score to a person or enterprise to offset state revenue taxes. “About 97% of the credit are bought by movie firms that pay little in Georgia taxes,” usually at near face worth, according to The Atlanta Journal-Structure.
“The bulk portion of credit is utilized by particular person taxpayers,” in keeping with the 2023 audit. “This reveals that almost all manufacturing firms find yourself transferring a big quantity of the credit to people, moderately than corporations.”
Blackmon steered that beneath the brand new proposal, firms would collectively solely be capable of promote credit as much as 2.5 p.c of the earlier yr’s state funds, which might nonetheless whole simply over $900 million.
“We’re actually not limiting the credit score in any respect,” Blackmon told reporters this week. That is too unhealthy: Provided that 97 p.c of credit are bought, it is clear that few of the businesses really depend on them for something aside from a method to make a fast buck by fleecing Georgia taxpayers.
