Film industry expresses concerns about Jindal tax proposal

From WVUE TV in New Orleans:

The people who make their living in Louisiana's growing film industry are expressing their worries about a proposal in Governor Bobby Jindal's new tax plan. That plan calls for new limits on some tax exemptions, and some fear that could shut out big stars and, in turn, a lot of local jobs.

To be sure, the Louisiana film industry has become a job-producing juggernaut. 

Will French with the Louisiana Film and Entertainment Association said, "When we first started there were about 200 people working in the industry. Now it's grown to about 14,000. That's the same number that works in the seafood industry."

Thousands of people, such as Mark Lowry, have gone from menial work to lucrative employment with health benefits.

And

The people who make their living in Louisiana movies say that, while the million-dollar limit on tax credit limit may sound good, a similar plan has not done well in North Carolina. 

"North Carolina proposed a similar one-million cap and they've got less than 10 percent of the work Louisiana has on an annual basis," said French. 

States such as New Mexico and Michigan saw big dropoffs, too, after they reduced tax credits.

Kutcher said, " As soon as they hiccupped, the local studio went into bankruptcy."

More here.

For at least a couple of decades now, this has been a familiar story.  States and municipalities, hoping to bring some business their way, will offer various corporations low or no tax schemes in exchange for setting up shop here rather than there.  These corporations will promise everything and the moon, lots of jobs, lots of local spending, an overall expansion of the pie, right in your own neighborhood, which will benefit everybody.  Indeed, this dynamic has become so common that states and cities have actually entered bidding wars with each other, and the government entity offering the lowest taxes and the sweetest kickbacks will get the corporation to come to town to shower locals with gold and jewels.  At least, that's how it works ostensibly.  Generally, corporations are smarter than state and local governments, and usually play them off against one another successfully.  Sure, some new jobs are created, but it is almost never enough to make the situation an even tradeoff.  No, states and cities screw themselves in this chump's game, and big businesses laugh themselves to the bank.

That's why Louisiana's tax abatement scheme for the film industry is so unique: it actually works the way it's supposed to.  By targeting an industry, instead of a single business, and doing it in a way that both attracts business from out of state while at the same time encouraging local entrepreneurialism,  the state has hit an economic home run.  Film is one of the very few growth industries here.  And it continues to grow.

That's not something that's simply nifty and cool, either.  New jobs and new business activity mean new tax revenue for the state that did not exist before.  New jobs and new business activity also mean more private sector spending than there was before, which, in turn, creates still more business and more employment, which, in turn, creates even more tax revenue.  When you get the economic ball rolling, it grows in both size and impact, and that is exactly what's happened with the film industry in Louisiana.

The bottom line is that 2007's financial collapse, and the ongoing sense of recession alternating with sluggish growth it spawned, have caused state tax revenues to decrease sharply from sea to shining sea.  So, yes, Louisiana needs more money in order to function.  But resorting to unproven right-wing social experiments which are demonstrably counterproductive is NOT an answer.  It's not even a joke.  Personally, I suggest looking to the oil and gas industry, which isn't going anywhere anytime soon, and is positively awash in cash.  That would be a start.  Or, better still, Jindal can use his national prominence to scold his deluded fellow Republicans for so successfully obstructing any and all federal stimulus measures, which would have included, and could still include, hundreds of billions in aid for the states.  This kind of stuff would work.

Wringing the neck of the golden goose Hollywood brought to the bayou, however, is just plain stupid.

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