Recently someone asked – in reference to “runaway” productions – productions leaving California for other U.S. states, or even other countries, “why should the government spend money on movies and tv productions?”
To clarify, typically state governments don’t “spend money” on tv and film projects. They offer tax incentives, or even tax rebates, for qualified film project expenditures within their state. In other words, qualified tv or film (or sometimes video game development or other tech development) expenses which are paid for within a particular state will qualify for a tax credit or a tax incentive by that state.
Why? Because it creates jobs and causes money to be spent within that state. Â Which creates jobs. … And perhaps even whole new industries within that state.
What is at issue is whether a state, in this case California, is offering any of the tax credits or tax rebates that most U.S. states now offer. Because most states now offer either tax credits or tax rebates – which film productions can convert to actual cash money through banks or investors, television and film productions have a strong incentive to film in those states.
Instead of states that do not offer such incentives.
So the states that offer the incentives get the production jobs, and have the production dollars spent on those productions spent in their states.
Instead of the states that don’t offer those incentives.
Those buck are spent on things such as local transportation (taxi’s, towncars, trucks, courier services, etc.), local set builds and the related carpenters, electricians, plumbers, landscapers, painters, set decorators, prop rental and prop-masters, etc., apartments, hotels and meals for the cast and crew throughout the production, any state-based/local talent that’s hired (actors, extras, musicians, sound people, grips, gaffers, sparks (for you Brits), etc., location expenses and state-based equipment rental and the like, and a myriad of other expenses that qualify for the tax incentives.
All of those dollars go into the local economy and have a “knock-on” effect of being spent over and over throughout the local/state economy, thereby supporting not only the immediate jobs, but the jobs related to the jobs, supporting the jobs or the people supporting the jobs, etc., etc., etc.
In the states that have done this well, AND have built the production infrastructure to lure productions over a span of years, it has been a bonanza of job growth, and perhaps even developed into a whole new industry for that state. (see Louisiana).
So by NOT offering tax incentives, California – despite it’s tremendous depth of artistic and technical talent in the tv and film industry, is losing THOUSANDS of jobs – perhaps TENS OF THOUSANDS of jobs, and HUNDREDS OF MILLIONS OF DOLLARS – to other states. THAT is why governments offer tax “incentives” on television and film productions.