North Carolina cuts Hollywood fat cats down to size

North Carolina cuts Hollywood fat cats down to size

Taxpayer film incentives: North Carolina and California traveling in different directions.
Taxpayer film incentives: North Carolina and California traveling in different directions. (Composite of state flags by the author)

WASHINGTON, August 27, 2014 – A variety of news sources reported this week the somewhat surprising news that North Carolina is phasing out its once generous tax incentives for movie producers to film in the Tar Heel State.

North Carolina’s lavish tax incentives have for years been drawing major productions to abandon the tax hell of California and move to this tax friendlier southern state, a locale made even friendlier by its special breaks for movie moguls.

The incentives have resulted in several major film and TV offerings being filmed in North Carolina in recent years including movies and shows like “Iron Man 3,” “The Hunger Games,” “Homeland” and “Under the Dome.”

But with Republicans now firmly in control of the Tar Heel State, those lavish incentives are largely coming to an end. It’s part of a developing trend as other locales as well seek to limit taxpayer funding of an industry that doesn’t make much of a long-term difference to local economies.

Deadline Hollywood noted these developments recently in an almost hilariously snarky report:

Pushback from Tea Party ideologues who oppose all forms of tax incentives that favor one industry over another is largely responsible for the growing trend. That’s especially true in red states whose legislatures or state houses are dominated by fiscal conservatives — as is the case in North Carolina. “The Tea Party faction played a huge role,” said an entertainment-industry source familiar with the situation in the state. “It’s not just about film incentives; it’s about an anti-government spending philosophy across the board.

Gosh, now isn’t that too bad. Cry me a river. Let’s parse that paragraph.

First, readers should note the double-barreled blame game being directed against the “Tea Party,” or more specifically, those “Tea Party ideologues.” This accomplishes two things. First, it adheres to Senate Majority Leader Harry Reid’s Alinskyite diktat, namely that during this election year, everything is to be endlessly blamed on the demonized Tea Party and/or the Koch brothers.

Second of all, it tags the Tea Party as “ideologues,” ignoring the fact that Hollywood has, for years, been politically controlled by Stalinist “ideologues” who insert left-leaning propaganda into nearly every film that’s produced.

Worst of all, along with the dreaded Tea Party, more and more state houses are being “dominated by fiscal conservatives.” (You can just hear that spooky double-bass motif from “Jaws” creeping up on you.)

But the icing on the cake is this report’s sheer horror when faced with the fact that North Carolina’s decision to act with fiscal and fiduciary responsibility on behalf of its long-suffering taxpayers “is not just about film incentives,” but about “an anti-government spending philosophy across the board.”

Well, yes, it is about film incentives. Hollywood tycoons hate to lose those extra bucks in their already phenomenally fat P&L statements. But to characterize this as an “anti-government spending philosophy” is a bit of a stretch.

Huge tax incentives to film companies are no less irritating than tax incentives shelled out to other businesses as well. In an era when every American taxpayer—save for the politicians, the lobbyists, and the Warren Buffetts of this world—is being forced to cut back and retrench, why should they be shelling out tax dollars to support the 1%, particularly when it comes to American entertainment interests that happily pocket the money while producing films that trash the country that helped them get rich?

We fail to see why this commonsensical attitude toward trimming government budgets in hard times is so evil, or why conservatives of the Tea Party are such a bunch of reprehensible “ideologues” for wishing to impose a bit of common sense to runaway government budgets.

In any event, North Carolina politicians are making it real, responding to taxpayer distress by pulling in some of the more egregious giveaways originally supported by Hollywood-friendly left-wing Democrat “ideologues” courting an industry that reliably coughs up plenty of  big-time support every time an election year rolls along.

To trim those taxpayer gifts to Hollywood back to something resembling reasonable levels, the legislature has decided that starting in January 2015, North Carolina’s current 25% refundable tax credit to filmmakers is being eliminated in favor of offering a less costly competitive grant program that’s capped at $10 million per year and $5 million per production, max.

For that reason, the total value of the new incentive program will crop from the current $60 million to the aforementioned $10 million next year. It’s a pretty good sized cut. But, on a percentage basis, it’s no worse and likely better than the kind of budget and benefits cuts experienced by the average American worker over the past 6 years.

MPAA had been lobbying legislators to keep the current program going, claiming that cutting it will result in lost jobs. While that’s most certainly true, many of those production jobs were part time and not top tier, wage-wise. And in any event, the taxpayers were not exactly getting a bang for such a large amount of bucks, given that profitable movies generally enrich already wealthy non-North Carolina residents anyway.

For its part, California, alarmed at its massive loss of film jobs to other states as well as Toronto, Canada, is pushing legislation to bring those films and jobs back. The legislature is inching toward quadrupling its tax incentives for film production there, hoping to re-establish its once unchallenged status as the film capital of the world.

Apparently, the current California philosophy is to enrich the already rich at taxpayer expense even as state pols lobby for unlimited immigration that will gradually erode the average worker’s wages in that state.

Added to California’s already onerous tax burden, which vies with New York and New Jersey as the nation’s worst, that state’s runaway socialist legislature, along with its re-animated Governor Moonbeam, are driving more and more small businesses and middle class citizens out of the California economy forever.

The real tragedy, though, is that those California expats move to Red States to lessen the tax burden and stretch their salary dollars; but then immediately begin to vote for the kind of Democrat politicians that drove them out of the Golden State to begin with, eventually ruining their new home states as well.

Unspoken of and virtually unnoticed, this is America’s real immigration problem. But that’s the topic for another article.

Meanwhile, North Carolina taxpayers can breath easier as its current Republican legislators and governor begin to trim state government back to the essentials. More states nationwide would benefit from this kind of prudent fiscal management.

Meanwhile, looks like most movie moguls will have to travel elsewhere for that free taxpayer money.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17