The true value of film tax credits for North Carolinians
Published September 7, 2014
by Wiley Cash, author, published in News and Observer, September 6, 2014.
From 1936 to 1942, photographer H. Lee Waters traveled across North Carolina shooting 16 mm silent films of the state’s people. Later, Waters would return to the town in which he’d shot a particular film and screen it at a local movie theater as a special attraction.
In all, Waters screened more than 250 of what he called “Movies of Local People” in 118 towns, most of them in North Carolina, allowing thousands of North Carolinians to see themselves and their communities on film, many of them for the first time. These films were shown during some of the toughest years of the Great Depression, and seeing themselves and their communities as being worthy of the big screen no doubt buoyed citizens’ hopes for the future as well as the pride they took in the places they called home.
Now it’s hard to imagine whole communities of people who haven’t seen themselves in some kind of motion picture, but recent changes to North Carolina’s tax incentives make it likely that the state’s residents will never again see their cities and towns on the big – or small – screen. This is heartbreaking for North Carolinians because so many of the nation’s most beloved films have been shot wholly or at least partially in the state.
According to visitnc.com, since 1980 over 800 films have been shot in North Carolina, many of which are considered icons of American film: “Forrest Gump,” “Last of the Mohicans,” “The Color Purple,” “The Fugitive.” North Carolina has also produced some of pop culture’s most memorable television shows, including “Matlock,” “Dawson’s Creek” and “One Tree Hill.”
As a native North Carolinian who spent 10 homesick years living in Louisiana and West Virginia before getting the opportunity to return home, I’ve experienced the buoying sense of hope and pride when beholding my native soil as it’s portrayed on the screen: the exhilaration of seeing the lush, green mountains of North Carolina in a darkened theater on a sweltering Louisiana afternoon; the nostalgic comfort of taking in a North Carolina coastal sunset on a snowy night in West Virginia. These experiences not only took me back home, they also showed how beautiful my home is to people who haven’t been fortunate enough to experience it firsthand.
But the film and television industry in North Carolina isn’t something that makes me feel good just about the beauty of my native state; it also makes me feel good about my state’s financial security. A recent study of North Carolina film incentives conducted by N.C. State University’s Poole College of Management found that from 2007 to 2012 every $1 in tax credits led to $9 in spending, which resulted in $1.50 of tax revenue that went directly into state coffers. In 2012 alone, $60 million in tax credits yielded a positive cash flow of $25 million back to the state. It must also be pointed out that the NCSU study found that the state’s film incentive program helped maintain 4,200 permanent jobs in North Carolina with an average yearly salary of $66,000.
Over the past year, there has been a concerted effort in North Carolina’s GOP-led legislatureto end the state’s film incentives in favor of a cumbersome grant program that will offer only a fraction of the current incentives for film and television. Months ago, rumors of what is now becoming reality drove productions out of North Carolina to more film-friendly states like Louisiana, Georgia and California. As the deadline to extend the state’s film incentives draws nearer, the exodus of production companies is increasing exponentially. There are already rumors that Nicholas Sparks’ film “The Choice,” which is scheduled to be filmed in Wilmington this fall, will be the state’s final production.
This is especially sad news for me as my second novel “This Dark Road to Mercy” was recently optioned for film. The novel is set primarily in my hometown of Gastonia, an old mill town just west of Charlotte, and the film’s director has been planning to travel to North Carolina to scout film locations, but those plans are on hold. Gastonia and Gaston County lag far behind neighboring counties in job production and economic development, and it would mean a lot to residents and local businesses to see their town on the big screen. I know it would mean a lot to me.
But now there is a very good chance that Gastonia will be moved to Louisiana, Georgia or California. When moviegoers see my hometown on the screen, they’ll be seeing something that isn’t real, which is what we expect of the movies but not what we expect of the places we know and love – and certainly not what we expect of the politicians who could keep this from happening.
There is hope that Gov. Pat McCrory will convene a special session to revisit the possibility of extending the state’s film incentives. If he refuses, McCrory will be party to a legislature that annually gives away $25 million to Louisiana, Georgia and California. The governor and the state GOP will have stood by and watched while 4,200 permanent jobs leave the state. They will have remained in their seats with empty popcorn buckets in their hands as the houselights come up and North Carolina’s silver screen darkens forever.
Wiley Cash of Wilmington is a New York Times bestselling author of “A Land More Kind Than Home” and “This Dark Road to Mercy.”
September 7, 2014 at 10:23 am
Richard Bunce says:
OK, the market distorting film subsidy is good for Wiley Cash... that is not all North Carolinians. He assumes a lot that has not been proven and fails to mention the study he mentioned was sponsored by film subsidy advocates while a study by the legislature largely discredited that study.
North Carolinians should want lower taxes and regulations for all businesses, not just a few favored by political parties and the government bureaucrats in Raleigh.
September 7, 2014 at 11:59 am
Norm Kelly says:
So, in the long run, and probably in the short run also, which is better: a tax code that is fair and equitable to everyone or a tax code that allows government agencies and unelected officials to give out 'incentives'? This is the question that I believe is being debated in the NC legislature as the movie 'incentives' package is being discussed. At the same time, perhaps this one government give-away program is the beginning of elected officials looking at every government give-away program with an eye to saving the state money as well as being more fair and honest with ALL residents; legal and illegal.
In order for the state to give ANY 'incentive' to ANY company, the state must first HAVE that money to give away. How does the state acquire money? Let's remember that most low-information voters, and most lib supporting voters, which groups often overlap, believe that every level of government simply has money to spend. Most of these people have no concept of where government money comes from. So, the first step that needs to be taken in understanding 'incentives' is to understand where EVERY level of government gets the money they give away.
Lesson 1: governments HAVE NO MONEY of their own. In order for ANY government agency to GIVE money to ANY entity it must first acquire that money. It matters not whether the money is called an 'incentive' or a 'tax break' or any other name that you may choose. In order for the government to give money to ANYONE it must first STEAL THAT MONEY from someone else. And when government decides there's a special friend that needs to not pay some tax, that tax is by default automatically HIGHER for everyone else who DOES pay that tax. Take money away from one group in order to give it to some other group. The reason I use the word 'steal' to describe this scheme is because that is exactly what it is. You want to provide some benefit to someone/some group/some business. You have NO MONEY to do this with. I already pay the tax that you want to play games with for your favored institution. If the favored institution played by the same rules I AM FORCED to play by, then the income to the government would go up, potentially making it such that the tax RATE for ALL OF US could be lowered so we ALL pay less in taxes, yet the government continues to get as much money, or possibly more. However, when YOU decide that some FAVORED entity MUST be given a tax break/'incentive' in order to encourage them to 'do business' here, you are AUTOMATICALLY forcing every other entity who pays that tax to PAY EVEN MORE. It's not that every other entity simply continues to pay the same tax RATE for the existing tax that you don't enforce on the favored entity, but that all other entities ARE FORCED BY LAW to make up the difference for the money you give away to YOUR favored entity.
Lesson 2: there's a law of diminishing returns. It works no matter how government entities choose to interfere. When you raise taxes too high, entities CHOOSE not to participate in your schemes. This means that when you charge too much in taxes for an entity to choose to do business here, you force that entity to do business somewhere else that it makes financial sense to do business there. Witness Burger King and the hypocrite Warren. This IS NOT what libs describe as being unpatriotic. This is simply good business sense. Canada, amazingly, has a lower business tax rate than the US. So without incentives, every business there pays the same tax rate. Burger King is NOT being given a special incentive to move to Canada. They are being treated like EVERY OTHER business that chooses to do business in Canada. What's the result? Canada doesn't penalize every entity already there in order to 'entice' Burger King to move there! Canada does NOT suffer a loss by having to offer 'incentives' to get BK to move there; because BK WILL PAY the taxes levied by the governments in Canada. The NET INCOME to the governments in Canada will go UP! Without playing games with OTHER PEOPLE'S MONEY! So, the law says that when the tax rate is too low, the government isn't getting what they should or must in order to cover expenses. When the rate is too high, the income to the governments is artificially reduced because entities choose to do business where it doesn't cost them so much. When the rate is 'just right', which is not intended to be a slap in the face of lefties, then entities CHOOSE to do business here and PAY THEIR FAIR SHARE! No special 'incentives' are required; no special favors are doled out; everyone PAYS THE SAME RATE knowing that the system is fair. And isn't this the biggest whine coming from libs/socialists/the left/editorialists at the N&D? Isn't the normal refrain from these groups that they want 'the rich' to pay their fair share? The difference is that these are low-information, misinformed, libs who despise success and want to penalize success! The fair thing to do is to set the rate the same for every entity, make every entity either pay the tax or forget the tax, but NOT to play FAVORITES! Do NOT penalize existing entities in order to 'entice' YOUR favored entity. Allow us ALL to pay the same RATE and watch how a level playing field succeeds.
Libs/socialists DO NOT LIKE or understand a level playing field. Libs/socialists/N&D staffers prefer to have a field they can play with, change the rules whenever the whim hits them, and change the definition of 'level playing field'. Common sense is missing in the great debate about 'incentives' because the problem is misdefined by the supporters of government control. The question is whether some entity gets benefits while other entities are penalized in order to accomplish the 'incentive'. Or should every entity be subject to the same government schemes such that we could all perhaps pay a little less. Kinda like the demon party plan to force MY property insurance premiums just a little higher so I can subsidize the insurance premiums of those who live in more hazardous areas. Same idea in the long run. Government decides who to penalize so they can choose who to benefit. They claim to care about the costs to those who live in the hazardous areas, which is why they want to subsidize their property insurance costs. But at the same time the opposite is also true: these do-good pols show that they DON'T care about the rest of us whose insurance premiums are artificially inflated in order to pay for their schemes. If they cared about EVERYONE equally, they would let my insurance premiums be what they SHOULD be and let the insurance premiums for those in the hazardous area be what THEY SHOULD BE! I don't live in a hazard zone, but I pay more as if I did. Just like every other 'incentive' the government decides to implement: someone is given an 'incentive' and someone else pays for it. I pay so lib pols can allow others NOT to pay.
Just another lib scheme!
