Wednesday, February 27, 2008

A Pox On Both Your Houses

In local news, today's Hartford Courant reports on the liberal think tank, Connecticut Voices For Children, who are all steamed about the state's 30% film tax credit. According to the group, this means an estimated $116 million in lost revenue next year. What we really have is a lot of mind-boggling stupidity all around.

A tax credit means that film companies at work in the state are paying some sort of reduced tax rate. In this case, that means that when their income is taxed, 30% of that income will be tax exempt. It does not mean they're not paying any taxes, nor does it mean that the state is literally writing checks to big film companies. The only reason you have an increasing number of major movie productions going on in Connecticut is because of the tax credit. Take away the tax credit and you'll probably be losing a great deal of tax revenue. So the state would have less revenue in which to invest in the children Voices For Children cares so much about.

Unless you actually understand what a tax credit really means, you may have been under the wrong impression after reading the article - and apparently Connecticut Voices For Children has no idea what they're talking about either.

That all being said, it's funny how politicians love these wacky little tax schemes. The truth is, they do make a great deal of financial sense - everyone's a winner when the movie companies can pay less in taxes and the state gets more revenue and an influx of jobs. Of course, seeing how well this works for the film industry, you'd think some of the politicians would get the idea that this could work in other industries. But rather than going across the board and rather than granting tax credits, why not just reduce the corporate income tax rate? Why not set taxes at a rate that would actually make businesses want to come here? I don't have a big problem with the film tax credit, but the truth is, it's sort of a slap in the face to businesses that have been here for years. Why should businesses be invested in staying in the state when the state would rather give tax breaks to newcomers.

It all just goes to show how totally fucked up the system is. I always like to say that liberals have it half right when they complain about special interests and government favors to big business. The thing is, the problem isn't business. The real problem is the government failing to treat everyone equal, giving special favors to certain industries and companies.


Blogger McMc said...

Just a few comments...

- The CT Voices For Children are idiots.

- Why not offer "discounts" to the film industry? It's all profit and it's all temporary. All the film studios are in L.A., with some smaller branches and TV branches in NY. When they decide to make a movie, they pick a location and in turn, pay for that location. When states (like CT) offer tax credit, they're really just saying, it'll cost you less to film here. And as you said, it just brings in money and a few jobs in the short term (no more than a few months per picture) and best of all, when they're done filming, they leave. It's essentialy a get rich quick scheme with the only drawbacks being the possible disctraction/special attention given to movie makers and how they use surroundings (shutting down streets, filming at night, etc.). As long as a town is OK with it though, everything is peachy keen.

Now, we don't offer tax credits to other outside businesses because they are permanent and because we don't really want to cause competition between states. Imagine if companies kept moving around just because of tax rates being lower in other states. It wouldn't be smart.

With the film industry though, because of the short term stay and because some states/towns wouldn't even want to deal with the hassle of having movies being filmed and because movie makers are essentially looking for the "right location" as opposed to cheapest all the time, it just makes sense for some states looking for money to offer tax credits.

P.S. - I wrote this really late and I'm tired and I don't think it makes a lick of sense, but if it does, then my job here is done.

4:03 AM  

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