What could your family do with $220?
In Georgia, thanks to that state’s film tax credit program, that’s not an idle question. Independent analyses of the program discovered that it had gotten so big that in 2018, it was costing Georgia’s taxpayers an average of $220 per household.
And because Georgia is the only state not to cap the total amount of film tax credits that it can hand out in any given year, it’s only gotten worse since then.
The way Georgia’s program works is that production companies get tax credits worth 20 to 30 percent of what they spent shooting films, TV programs and even music videos or commercials in the state. These credits don’t just reduce the amount of taxes the production companies have to pay in Georgia, though. That’s because companies generally pay taxes on profits and Hollywood long ago perfected accounting practices that hide profits from taxmen, investors and even actors.
This is where the disaster gets worse. These tax credits are transferable, which means that film producers can sell them to companies that do have Georgia tax liabilities. The going rate for a tax credit is reportedly 90 percent of its face value, and there’s a thriving market in them among major corporations that would otherwise be paying Georgia state income taxes.
This is so common that the state auditor reported that in 2016, less than $1 million of the $667 million in tax credits issued that year was actually used by production companies to reduce their own tax liabilities to the state. Most of it ended up in the hands of companies that had nothing to do with the film industry – but the state won’t release the list of what companies bought these for-sale tax breaks, or how much companies are spending on them.
And as for the “job creation” and “economic impact” claims by the film tax credit’s supporters? Another 2020 report by the state auditor found that they were wildly overblown, to the point where they counted positions such as movie theater concession workers as “film industry jobs.” In fact, the auditors found, Georgia’s $667 million in 2016 tax credits “resulted in an estimated $602 million net revenue loss to the state.”
Despite all this evidence, the lure of Hollywood is too strong for Georgia to resist. In 2021, the state handed out a record $1.2 billion in tax credits. Earlier this year, proposed legislation to cap the program at $900 million per year and end the practice of letting the credits be sold failed to advance in the state legislature.