The Hollywood Economist by Epstein Edward Jay

Author:Epstein, Edward Jay [Epstein, Edward Jay]
Language: eng
Format: mobi, pdf
Publisher: Melville House
Published: 2010-03-08T16:00:00+00:00

THE NEW CIVIL WAR AMONG

THE STATES

Not willing to leave all the glamor of providing backdrops for Hollywood movies to Canadian interlopers, states are now competing against each other to lure studios with lucrative incentives to shoot movies in their bailiwick. The incentive usually takes the form of awarding state tax credits to a movie, which a studio can then sell to corporations or individuals able to use them to offset their taxes. Warner Bros. and Paramount’s 2008 film The Curious Case of Benjamin Button is a case in point. The film had been budgeted at over $160 million because of expensive computer-generated special effects needed in postproduction to age and de-age the characters played by Brad Pitt and Cate Blanchett. The producers figured out that by filming it in Louisiana—for example, substituting the Gulf coast at Mandeville for the English Channel—they could qualify for the tax credit not only on the scenes actually shot in Louisiana but also for the special effects done in Los Angeles-as-Louisiana. They were also awarded a 15 percent tax credit for the entire budget of the film, including the money spent out of state on special effects and other post production work. As a result, the producers were able to cash in $27,117,737 from these tax credits, a windfall they would have missed had they shot the movie in Hollywood. Of course, this largesse proved costly to Louisiana. In 2006, it doled out $121 million in tax credits and, after it was discovered that producers might be paying counter-bribes to qualify, the Louisianan who oversaw the program, Mark Smith, pleaded guilty to taking $67,500 in bribes to inflate production budgets for film companies. Even so, in 2008, more than seventy films and TV productions qualified for tax credits in Louisiana.

By 2008, no fewer than forty states were offering some kind of incentive to lure movies. Most used the same form of tax credit as Louisiana, which is then “monetized” for the studios by specialized financial companies, such as Screen Capital International. A few states simply rebate a percentage of the budget to the studio. New Mexico, for example, gives a 25 percent production cost rebate. As far as studios are concerned, the more the merrier, and the more complex the better. The incentive war between the states is just another opportunity for enrichment.

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