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Hooray for Hollywood: Florida taxpayers could hand film industry $1B tax break

By   /   February 25, 2014  /   News  /   No Comments

By William Patrick | Florida Watchdog

TALLAHASSEE, Fla. — As Tinseltown readies for Oscar night, Florida‘s film and entertainment production industry is reportedly lobbying lawmakers for $1 billion in tax perks.

LIGHTS, CAMERA, SUBSIDIES: Florida's film production industry is reportedly lobbying state lawmakers for a $1 billion tax giveaway package.

LIGHTS, CAMERA, SUBSIDIES: Florida’s film production industry is reportedly lobbying state lawmakers for a $1 billion tax giveaway package.

The giveaways, or subsidies, allow for selected companies producing films, commercials, music videos, “high-impact” television shows and interactive websites to skip out on as much as 30 percent of their tax bills as long as they’re working in Florida.

Everyone else will pick up the difference, Matthew Mitchell, senior research fellow at the Mercatus Center at George Mason University, told Watchdog.org.

“The vast majority of evidence suggests these are not schemes that raise more revenue than they lose,” Mitchell said. “Clearly, the taxpayer loses.”

Why would lawmakers go for it?

According to a Department of Economic Opportunity report: to encourage the use of Florida as a filming site and to “sustain the workforce.”

Even in the best case scenario, such incentives are not without trade-offs.

“Even if a state economic development office can track the number of jobs it created, it’s not effective at discovering how much higher prices are that consumers will have to pay, how much higher taxes are for consumers to pay the difference or how much economic exchange didn’t take place because of those higher taxes and prices,” Mitchell said.

In addition, the program’s incentives — used to lure companies to an already low-tax, business friendly state — mostly come in the form of transferable tax credits. That means recipients can sell them to other firms.

Sales tax exemptions would also apply for items purchased or leased during production activities.

It’s also an attractive way to spend public money, Mitchell said. Public officials can stand next to firms that have relocated.

“Unfortunately, it’s a no-brainer. Politicians will go with conspicuous privileges to a few people even if it involves inconspicuous costs borne by everybody else,” he said. “In this case the winners are very conspicuous, easy to identify and a small number of people.”

Similar giveaways have ballooned in recent years.

From 2003 to 2010, the Florida Legislature appropriated $73 million in tax credits to the state’s entertainment production industry. The following three years saw lawmakers dish out $296 million.

Now, according to the Miami Herald, industry reps are pushing for a cool $1 billion subsidy package through 2020.

Incentives are overseen by the Office of Film and Entertainment, a five-person operation located within the Florida Department of Economic Opportunity.

DEO hosts an array of public information relating to taxpayer-funded incentive contracts on its website. Its transparency portal is designed to give “unprecedented access” to performance measurements and job creation data.

But don’t waste your time looking for OFE data on the site — it’s not there.

Integrity Florida, a Tallahassee-based nonpartisan government watchdog, cited the program’s lack of transparency as a key concern in a report released last week.

“The Office of Film and Entertainment may not be properly utilizing the Florida Film and Entertainment Advisory Council in decisions about incentives and is possibly working with the council’s executive committee out of the sunshine,” the report states.

Mitchell said he wasn’t surprised and warned that tax credits, the bulk of the program’s incentives, are much harder for taxpayers and voters to trace than outright grants.

“There’s not a ton of things economists agree on, but when you survey academic economists the vast majority oppose targeted subsidies. The consensus is across the ideological spectrum,” he said.

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William Patrick is Watchdog.org’s Florida reporter. His work has been featured by Fox News, the Drudge Report, and Townhall.com, as well as other national news and opinion websites. He’s also been cited and reposted by numerous state news organizations, including Florida Trend, Sunshine State News and the Miami Herald, and is a member of Investigative Reporters and Editors and the Florida Press Association. William’s work has impacted discussions on education, privacy, criminal justice reform, and government and corporate accountability. Prior to joining Watchdog, William worked for the James Madison Institute in Tallahassee, Fla. There, he launched a legislative news website covering state economic issues. After leaving New York City in 2010, William worked for the Florida Attorney General’s Office where he assisted state attorneys general in prosecuting Medicaid Fraud. William graduated magna cum laude from Hunter College, City University of New York. He lives in Tallahassee with his wife and three young children.