Op-Ed originally posted in Daily News
by John Kaehny, Executive Director, and Elizabeth Marcello, Senior Research Analyst
Gov. Hochul, the state Senate, and Assembly are about to approve $7.7 billion in future New York taxpayer giveaways for Hollywood producers. Why?
Our watchdog group, Reinvent Albany, took a close look at the Empire State Development Corp.’s latest data on the New York film/TV tax credit. It shows New York taxpayers gave Hollywood producers $66,819 per year for each full-time film and TV worker they employed.
This seems like a lot of tax dollars to pay a producer to hire someone to work on a sitcom. Those same tax dollars could be used to pay for a worker building a new bridge, replacing lead pipes, patching a hole in a schoolhouse roof, nursing a sick person, or providing any of the many goods and services purchased by the state government. (Alternatively, the state could give taxpayers a break and reduce everyone’s taxes by $7.7 billion over the next 11 years.)
Consider some basic facts:
If an employer gets $66,819 in tax dollars to hire someone, the direct economic activity generated by that worker is roughly the same no matter what their job is. They could be paid to work on a movie, dig a hole, wander around a Walmart parking lot, or repave a street. All those workers will buy food, clothes, a refrigerator, tools, maybe a house and car, and occasionally go to the dentist. Their purchases and their taxes will recirculate in the economy, and generate a “multiplier effect.” But why should taxpayers pay workers to do things that have no public benefit, when we could pay them to do things that do have public benefits?
The New York film/TV tax credit is a reimbursement by taxpayers to producers for 25% or 30% of their eligible expenses, including equipment, sound stage rentals, and workers. A producer who spends $100 million gets $30 million of taxpayer funds, regardless of their movie being released or profitable. The producer — a person or a company — gets reimbursed via a refund on their tax return.
The money paid to film/TV producers comes from state tax dollars sitting in a revenue fund before being transferred to the General Fund. Due to some accounting gimmickry, that taxpayer funded payment is not counted as an expense in the state budget and thus appears to be “free money.”
Independent scholars overwhelmingly agree that taxpayer subsidies for film/TV producers are a poor use of public funds. We recently released a recent report summarizing eight national debunking studies, but there are dozens more.
Does it make sense for $7.7 billion of your state taxes to go to Hollywood producers so they spend $66,819 per year for each full-time film and TV worker they employ? As much as we’re looking forward to “John Wick: Chapter 4,” we’d rather have our taxes going to clean water, nice schools, and safe bridges.