Horror Story Report Blasts $100 Million Hollywood Tax Incentive

Horror Story Report Blasts $100 Million Hollywood Tax Incentive

California is trying to keep Hollywood at home. However, a newly-released analysis of California’s Hollywood tax incentives by the state’s non-partisan Legislative Analyst’s Office (LOA), blasts Hollywood’s $100 million annual tax subsidy for the film and TV industry, a measure which has been implemented since 2009. 

The report cites the annual Hollywood aid as a “race to the bottom that could cost California taxpayers billions” as the Golden State races to keep one of its foremost claims to fame at bay.

The findings arrive just as lawmakers in the Assembly are reviewing a bill, AB 1839, that would extend and expand funding for the film credit through 2022, according to the Los Angeles Times.

The report discounts a different report that was released in March by the Southern California Association of Governments (SCAG), which stated that every tax credit dollar returned $1.11 cents to the state and local governments, concluding that the state instead receives only 65 cents in tax revenue on each $1 subsidy. 

“The state government receives far less revenue back than it spends on the tax credit,” the study states, disputing a claim by the Los Angeles Economic Development Corporation (LAEDC) “that the tax credit program pays for itself.”

The LAO report concludes that, economically, the tax incentive program’s value is doubtful and urges the question as to why film production should get special treatment from the Legislature, says the Times.

California and 36 other states offer tax credits to the film industry, which places a tremendous amount of pressure on the Golden State as it strives to hang on to its role as the nation’s center of film and TV production, writes the Times

According to Bloomberg.com, California lost 16,137 entertainment industry jobs, with payments totaling $1.4 billion a year, between 2004 and 2012–a decline of 11 percent. New York, the Golden State’s main competitor, added 10,675 positions–up almost 25 percent — according to the Milken Institute.


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