Movie Tax Credits Are Unfair, Inefficient Policy

Movie clapper on wooden background

I have often been at odds with my fellow legislators, including Democrats, and occasionally with the governor, when it comes to doling out tax credits. More often than not I struggle to find a legitimate public purpose for proposed credits, I doubt that they really accomplish what they are supposed to, and I believe that they make the tax system unfair and inefficient. And as far as I am concerned, the movie tax credit that we passed this last session is a poster child for all those concerns.

If you read Allison Whitmer’s piece carefully, you will see that what this credit in effect does is make all the taxpayers pick up the tab for somewhere between 20 and 35 percent of the cost of producing a movie in Montana. As far as I know, there is no other business that enjoys a subsidy as lavish as this. Most of the credits we provide to businesses involve reducing the taxes they actually have to pay. But this credit for filmmakers is not tied to their tax liability, but to the expenses they incur. They get the credit in proportion to those expenses, and if the credits exceed any tax liability, they can be sold, for cold hard cash, to another taxpayer who can make use of them. In effect, there is no real difference between granting this credit and having the movie makers bring the bills for their expenses to Helena and having the state cover about 1/3 of them out of the General Fund. Nobody else – no other business – gets that handout.

Why is this extraordinarily large, and manifestly unfair, subsidy handed out to movie makers?

Well, one possibility is that, commercially at any rate, the movies they want to make in Montana are stinkers. They’ll spend a million bucks making a movie, and it will only generate $800 thousand in revenue. So for the project to pencil out, the taxpayers have to kick in. Which they might be happy to do that if the artistic value of the film was greater than its commercial value – after all, the arts have relied on patronage since time immemorial – but of course the Montana credit is there for any film regardless of artistic merit. Coming soon to a theater near you: The Montana Chainsaw Massacre.

But the real reason for this credit is not that Montana films would otherwise be commercial flops. It’s rather that the movie makers have made it absolutely clear that if they don’t get the credit, they’ll make their movies somewhere else where they do. That’s what it is all about: Montana taxpayers should foot the bill for made-in-Montana movies so that the producers of those movies can make more money.

Either way – whether we are propping up an industry that would otherwise fail or we are lining the pockets of itinerant movie producers who go from state to state looking for the best tax deal possible – what are we supposed to get out of all this?

Is it jobs? Is the movie industry supposed to be an engine of economic development? I certainly hope not. Pinning your hopes for economic development on an industry that cannot stand on its own two feet – or whose owners’ attachment to Montana only lasts until some other state offers a better deal – is a bad idea. And once you decide that you are going to use tax credits to foment business development and job creation, why should movies get special – and lavish – consideration? What’s wrong with all those other businesses that open every day, employ people, serve customers and don’t have their hands out?

What about the idea that movies made in Montana will raise the state’s profile – that they will “tell Montana stories in Montana?” Well, maybe. But as Whitmer herself explains, movie makers are perfectly happy taking the artistic license to tell any state’s story anywhere else they damn well please. She cites “Wildlife,” apparently a story set in Great Falls, that was shot in Oklahoma. But if Wildlife offered an attractive rendition of the Electric City, why does it matter where it was shot?

And what’s to stop a movie maker, “incentivized” by the Montana tax credit, from shooting a movie about Oklahoma right here in the Treasure State?

In the final analysis, there is nothing in this tax credit that requires that it be claimed only for movies that enhance Montana’s reputation or desirability as a place to live, visit, or do business. If that’s what we want our tax dollars to do, we can spend them a lot more carefully and effectively.

If you appreciate an independent voice holding Montana politicians accountable and informing voters, and you can throw a few dollars a month our way, we would certainly appreciate it.

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About the author

Dick Barrett

Dick Barrett is a retired University of Montana economics professor who has served in the Montana legislature since 2009. He currently represents Senate District 45 in Missoula. Due to term limits, the 2019 session will be his last.


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  • Why don’t wwe call movie credits what they actually represent: SOCIALISM. The government is trying to pick winners and losers. One thing that movie credits are definitely not is: FREE MARKET CAPITALISM. Maybe if we use the right terms, policies can change.

  • A friend who has been both actor and director in TV series and in movies for some decades told me he was directing a movie set in Montana, so maybe we could see each other! He usually works in New York or L.A. But later he said the film was being made in Virginia because of “financial incentives.” When I saw the film on television, it was painfully apparent to me that the landscape was not that of Montana or anywhere in the American West. Shortly after this, the Legislature passed the Media Act to give tax credits to those making films in Montana. I emailed my friend and told him of the new tax credits available just in case he had another film upcoming. He said he was currently making a film set Saskatchewan, but filming it in Manitoba because of tax credits. But he said he was “getting a little fed up with the whole racket. Tax-Schmax, the local folks rarely benefit.” I’d still like to see whether the Media Act can bring some cultural and economic benefits to Montana before giving up on the idea of helping film makers show a film about Montana with Montana settings and actors.

  • Cities and state provide incentives all the time, Dick. The economy of New Mexico has been saved by the tax benefits provided the entertainment industry that has proliferated in the state –in addition, it has increased tourism, inward migration and economic and business development tenfold. Good thing you are term limited, Dick. Your old ‘get off my lawn’ ideas are stale. Take a trip to Albuquerque and see the difference.

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