For years, North Carolina has offered generous tax breaks to production crews filming here — breaks not offered to other businesses. The breaks are scheduled to expire at the end of this year, thanks to last year’s tax reform.
Recent news articles spotlighting reactions to this potential expiration are interesting in that they not only highlight the obvious, but illustrate how ridiculous progressive liberals sound when they try to argue against tax cuts.
First, the obvious. Without special tax breaks, there will be less investment in the film industry in North Carolina. As stated by HBO series Homeland producer Alex Gansa in 2013: “I don’t think we would have been here if there hadn’t been tax breaks, and I believe if the tax breaks end, we’ll have to pick up and find another place to shoot.”
“I just feel like the rug has been pulled out from under me,” said Karl Golden, 50, who was a location scout for Homeland and now is a van driver for Banshee. He predicts the makers of the Cinemax show will pick up and move after they wrap this season, and that he’ll “probably file for unemployment if I don’t get the work that I need.”
So when investors see a better rate of return in other states due to a lower tax burden, those investment dollars (and the jobs that go with it) will leave the state for greener pastures. As the old saying goes: the less you tax an activity, the more of that activity there will be (and vice versa).
This must come as shocking news, however, to the liberals at the N.C. Budget & Tax Center (a project of the Blueprint N.C.-affiliated N.C. Justice Center). Just last year, as North Carolina was debating tax reform, they insisted that state taxes don’t matter to business investment.
A well-educated, highly productive workforce, access to markets and suppliers, sound infrastructure and a high quality of life for employees are more important to corporate leaders than state taxes, according to numerous surveys, studies and popular rankings of “business friendly” states, is what they insisted.
That’s funny. Because I haven’t once heard a film industry spokesperson or worker say they would stop filming in North Carolina due to changes in the workforce, infrastructure or quality of life. Nope. Just the tax burden. I guess those numerous surveys didn’t include film industry execs.
Indeed, Johnny Griffin, director of the Wilmington Regional Film Commission, said for a show like Under the Dome, all those other factors can’t compete with the bottom line.
“I don’t care how much somebody likes you and loves you, they are not going to come here and spend 25 percent more than they can spend somewhere else,” Griffin said.
Of course, many progressive liberals are now lobbying to reinstate the film industry tax credits by warning us that investment in film production will go to other states where the tax treatment is more favorable; apparently all the while completely oblivious to their self-contradiction to earlier proclamations that state taxes don’t matter to investment decisions.
State taxes do matter. As Griffin points out, return on investment weighs heavily, and when companies can get a better return in lower-tax states, they will take their investment dollars and jobs there. According to Griffin, companies may love everything about your state, but they will not continue to invest when other states offer better returns due to lower tax burdens.
The left’s claims that state taxes don’t matter are simply detached from reality.
—Brian Balfour is Policy Director for the Civitas Institute.
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