The NY Post’s Gregory Bresiger recently highlighted the benefits of New York’s film industry on employment numbers and tax revenue. Silvercup Studios‘ Stuart Suna discussed the direct impact the tax program has had on his business and expansion efforts.
As per the article:
Lights, camera, tax breaks.
New York taxpayers provided $1 billion in film and television tax credits in 2013-2014 for shows such as “Orange Is the New Black” and “The Good Wife,” helping to generate $5 billion in production and post-production work in the state.
The numbers come from a study conducted for Empire State Development (ESD), the state agency that administers the tax-credit program and farmed out the study to a third party, Camoin Associates.
“In the 10 years since the credit was implemented, employment in the film industry in New York state has increased by 50 percent, from 28,458 jobs to 42,564,” according to the ESD study, titled “Economic Impact of the Film Industry in New York State.”
“The credit is a very good deal for the state’s taxpayers,” says Stuart Suna, a co-owner of Silvercup Studios, which has two production facilities in Queens. It is opening a third in Port Morris in the Bronx.
“Without the credit, we couldn’t have expanded,” Suna says. He argues the credits are very effective because the film industry — much like the finance industry — is a critical part of the state’s economy. For every dollar of credits, Suna contends, the state receives more than a dollar in tax revenues.
Including Port Morris, Suna says, some 2,300 people will be employed by the various organizations that use his studios. Silvercup would still be operating if the tax credit weren’t offered, but jobs generated would be many fewer, Suna says.
However, some contend it’s a bad deal for taxpayers. They argue movie/television tax breaks are a wasteful use of state taxpayer dollars. Tax credits for one industry are given at the expense of other industries that don’t enjoy tax reductions. A better approach, they say, is to reduce everyone’s tax bill.
Critic Joseph Henchman, a policy analyst with the Tax Foundation, says the programs are not effective. The tax credits, he said in a recent speech, are “a poor use of limited taxpayer dollars, because they are costly in the short term and, in the long term, are incapable of achieving the economic development goals their promoters often emphasize.”
Scott Drenkard, an economist with the Tax Foundation, said Louisiana has just reduced its movie tax-credits program, while Michigan ended its.
“States are now looking at these programs with a new, healthy skepticism,” Drenkard said. He added state tax-credit programs are now going in the opposite direction.
“In the past few years, however, a record number of states are reconsidering, re-evaluating or even outright defunding, their film incentive programs.
“Michigan’s discovery that they were distributing over $100,000 for every (full-time) job that was created,” he said, “was instrumental in their decision to restructure the program, as they concluded that there were more cost-effective avenues for economic development and job creation.”
However, California, citing the loss of jobs to New York, recently tripled its tax-credit program.
“Yes, it is taxpayer money,” said Gov. Jerry Brown. “But it is going to build jobs for the future.”
Nevertheless, Drenkard warns, that states using the programs will inevitably end up in bidding wars in which every state will be hurt.
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