Bad Takes: Texas-sized Tax Breaks for Movie Productions

A Glitzy New Take on Corporate Welfare

Movie-loving Texans recognize that the Lone Star State has served as the backdrop for numerous films over the years. However, is it really worth it for Texas to incentivize film production at the cost of essential state funding measures like universal healthcare and teacher salaries? A recent change in policy by the Texas Legislature appears to prioritize the glitz and glamour of movie production over more pressing state needs. Last year, they approved a whopping $200 million to motivate movie and TV production in Texas in a dramatic jump from the previous session’s $45 million allocation. Would this move be beneficial to Texas? Or is it just another form of corporate welfare?

Texas’ Film Incentives Program

The Texas Moving Image Industry Incentive Program provides benefits for various forms of media production, including video games, cartoons, reality TV, and special effects, not just feature-length films. It offers better incentives than mere cash grants: it includes exemptions from sales taxes and refunds for state occupancy and fuel taxes. While this may seem like a considerable investment in the arts, critics argue that it serves more as corporate welfare for an industry that’s already profitable.

Star-Packed Support for the Program

Despite the frequent criticism from GOP politicians towards Hollywood, the $200 million quickly passed through the Republican-controlled Texas House and Senate. This may in part be due to support from famous Texas-born actors like Woody Harrelson, Matthew McConaughey, Dennis Quaid, and Owen Wilson. Their media campaign, called “Good for Texas,” claimed that every dollar spent from Texas film funding puts $5 back into the Texas economy. However, this statement, though oft-repeated, lacked transparency and supporting data.

Disputed Economic Impact

Experts caution that much of the claimed economic development appears to be as overblown as a big-budget Hollywood production. Critics argue that biased studies commissioned by the film industry and some state film offices inflate the impact of these subsidies on economic activity. There is no proven link between incentives promoting in-state filming and economic growth.

A comprehensive examination of film production incentives published last year found that “any gains do not spill over into the overall economy.” Furthermore, “movie studios are increasing out-of-state spending and activities, capturing the savings as economic rents.”

The amounts states have spent courting Hollywood over the past couple of decades are staggering. States collectively spent around $25 billion on film incentives in the past 20 years, according to a recent New York Times report. It’s hard to justify this consumption, particularly in a state with pressing needs in public education and healthcare.

A Need for Discernment

There is no doubt that investing in the arts, including support for local filmmakers and artists, is crucial. However, it’s also crucial to evaluate the real costs and benefits of such investments. Just like public funding for sports arenas and relocation tax breaks for employers, movie production incentives can lead to a problematic race to the bottom, with states vying to provide the most substantial corporate welfare.

Should funding be diverted to multibillion-dollar movie studios at the cost of public education and healthcare? It seems that balance and discretion should be exercised in the allocation of such funds. At present, Texas seems to be losing sight of its budget priorities in the glitz of Hollywood.