Deaf to facts, blind to optics

It’s not the only time we’ve ever agreed on public policy.

Victor Joecks, from the ultra-right think tank, Nevada Policy Research Institute, and I both disagreed with the Legislature in 2013 when it approved $80 million of taxpayer funds to subsidize movie production in Nevada. We didn’t like moving $70 million of the subsidy to the Tesla giga-giveaway during last year’s Special Session either. And we both think the 2015 Legislature is wrong to make the program permanent and unlimited as it is poised to do with the passage of Senate Bill 94.

Mr. Joecks comes from a hard-core “taxes prevent business from succeeding” perspective while my years in the Peace Corps, having malnourished babies die in my arms, convinced me that government has an obligation to provide for its most vulnerable citizens.

But we both agree this mania to ignore the free market and give away our hard-earned tax dollars to a favored industry—filmmaking, in this case—under the guise of creating jobs is misguided. And we’re both appalled that these tax credits are transferable, meaning they can be sold to large businesses like casinos, since the movie companies don’t pay enough taxes in Nevada to fully use them.

At the Assembly hearing on S.B. 94, Mr. Joecks was the lone voice in opposition. Chairman Derek Armstrong, a freshman Republican, firmly and repeatedly interrupted Joecks as he tried to inform the committee of the experience of other states that have succumbed to the film subsidy boondoggle.  

Chairman Armstrong didn’t want to hear it.  He insisted that Joecks limit his testimony to Nevada’s program, even though the experience of other states with a new policy is a routine discussion point on any bill.

He probably wanted to avoid the testimony because the news isn’t good. Louisiana, the first of 39 states that has subsidized moviemaking, has tried the hardest, offering unlimited tax credits. But according to the Pew Charitable Trust, Louisiana is cutting back, passing a bill this month to limit film tax credits to just $200 million a year. The state is facing a shortfall of $1.6 billion and can’t afford unlimited subsidies any longer.

Meanwhile, the Alaska Legislature approved a bill last month to eliminate the state’s movie tax credits altogether.

In Massachusetts, the Republican governor is pushing a proposal to end an $80 million film subsidy program. He thinks those funds could be used for a higher priority, such as increasing the earned income tax credit for the working poor.

Pew also reports that some states are “doubling down” on their subsidy programs because they’re concerned the industry is playing one state against another to get the best deal, and they don’t want to be left behind, ignoring the numerous independent studies showing the tax breaks cost more than they bring in. One think tank, the Louisiana Budget Project, concluded that the return on investment was “a flop” and taxpayers “paid $60,000 for every job created.” Naturally, industry studies paint a much rosier picture.

Robert Tannenwald, a noted economist, concluded in his research that “Film tax credits don’t pay for themselves, so states have to raise taxes or cut expenditures (to make up the difference). Those snuff out jobs as fast as film tax credits create them.”

Bill sponsor and minority leader Aaron Ford insists the scaled-back Nevada subsidy program has been very successful. Businesses that have profited from it enthusiastically agree. Ford wants the pilot program to be permanent and unlimited, reasoning that the framework will allow each Legislature to determine how many millions to devote to the program every biennium.

When the right and the left agree a policy is counterproductive and benefits a few at the collective expense of the taxpayers, you’d think the Legislature would listen. You’d be wrong about that.