Mar 2nd 2011, 22:43 by W.W. | IOWA CITY
MICHAEL KINSLEY delivers a persuasive plea against the now-common practice of states dangling subsidies in front of filmmakers to lure their glamourous creative efforts, and the substantial spending that comes with it, to their proud patch of America. In particular, Mr Kinsley sticks it to Bill Richardson, the former governor of New Mexico, for sticking up for this ludicrous form of regressive redistribution despite the lean times. Writes Mr Kinsley:
Richardson says that the film and TV subsidy has brought "nearly $4 billion into our economy over eight years" and has created 10,000 jobs. By "our," he means New Mexico. He says every state should emulate this success.
But of course every state cannot do that because it essentially is a "beggar thy neighbor" strategy. Some of the movies that have been bribed to locate in New Mexico would have been made in New Mexico anyway. That part of the subsidy is a total waste. Most of the movies that have come to New Mexico for the subsidy would otherwise have been made in other states. New Mexicans may not care if the citizens of those states lose out, but inevitably those other states respond with subsidies of their own and New Mexico gets beggared along with everybody else.
In any event, Richardson's statistical claims are suspect, to say the least. He would not win an Oscar for math. ...
Taking the whole zero-sum subsidy game into account, the only sure winners are Harvey Weinstein and his ilk, who need your money like you need 25 pounds. What's more, the film and TV incentives racket is a hotbed of corruption. Mr Kinsley points us to this report by Robert Tannewald, an economist at the Center on Budget and Policy Priorities, which points out the scandalously dodgy accounting states use to justify their taxpayer-bilking incentive programmes. But the corruption doesn't end at cooking the books.
Here in the Hawkeye state, the state government's film office got itself into a bit of a pickle playing fast and loose with tax credits for filmmakers. As a consequence, the programme was shut down and "Cedar Rapids", a comedy about an insurance conference set in, yes, Cedar Rapids, was filmed in Michigan. As Ed Helms, the star of "Cedar Rapids", summarised the matter: "Some guy was making a shitty movie in Iowa and bought a Range Rover using their tax credits." Or something like that. Despite the dreadful chill that comes of seeing an ersatz City of Five Seasons on the silver screen, the Iowa film-office scandal had a happy ending—for Iowans at least. Iowa's once and current governor, Terry Branstad, seems to have no plans of restarting it. Anyway, downtrodden Michigan taxpayers are probably too numb by now to feel another kick.
(Free exchange has more on state movie subsidies. Photo credit: Fox Searchlight)
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Now if Branstad can just keep his highway patrolcar purchasing above board, he'll be halfway to right.
Congress should permit states to tax out-of-state movies that received subsidies. The proceeds can be used to subsidize unsubsidized movies. The hope is that the threat of retaliatory taxes would be enough to prevent subsidies in the first place.
RR, brilliant. Kind of a Dorgan Amendment for Hollywood. I see a day coming when we'll be taxed only on the economic transactions we don't undertake.
"Draw the curtain on ALL subsidies".
There, fixed it for you.
RR, the more I think about it, the better I like this. I can't think of a better pro-growth levy than replacing the income tax with a duty on all the money you didn't make.
Actually @willwilkinson has more on state movies subsidies because @EconEconomics posted his this morning. #ModeledBehavior
This posting really needed more discussion about climate change and unions.
Only the state legislatures would dangle cash - via subsidies - to attract crack addicts.
Makes me wonder if there are more addicts in Hollywood or the state legislatures.
Regards