Right Problem, Wrong Solution

I can’t stand crony capitalism. I have little tolerance for special subsidies and tax breaks being paid out to rent-seeking industries. So you can imagine that I’m not on board with what’s going on in New York because … holy crap.

Nearly two-dozen studios raked in more than $1.5 billion in rebates from New York over the past nine years as the state rapidly expanded its incentives to lure in movies and shows.

Indeed, no New York tax program is as generous as the one targeted toward the film and television industry, and records obtained by Gannett’s Albany Bureau shows that big-name studios reaped massive rewards for shooting in the Empire State.

NBC/Universal was by far the leader in rebates awarded between 2006 and 2014, getting back a whopping $320 million for up to 30 percent of its production costs to film in New York.

Sony/Columbia was refunded $200 million, while HBO got $198 million, the WB got $185 million and CBS received $171 million, the records obtained by Gannett through a Freedom of Information request showed.

The figures were staggering to critics of the program, who said the money should be used instead to help existing businesses in New York, particularly in regions trying to recover from decades of decline in manufacturing jobs.

Overall, $423 million was sent back to studios in 2014 – with the most, $117 million, returned to CBS, said Empire State Development, the state agency that runs the program.

Defenders of the program point to $8.7 billion in business Hollywood studios bring to the Empire State. But there’s no way that this possibly pays for itself. Hollywood mostly brings in its own people and its own experts. What’s the benefit to New York jobs? Selling the camera crews some Starbucks? And it’s not like if the tax benefits disappeared, Hollywood would stop making movies and TV shows in New York altogether.

And the benefits to New York businesses run into another problem. If Hollywood studios aren’t paying their taxes, that means someone else is. That means businesses that are native to New York, that are based in New York, that do all their business in New York have to make up the difference.

Here’s where the critics get it wrong. They think New York should be replacing those subsidies with other more targeted subsidies for upstate businesses. That’s better, I guess, in some weird sense. But here’s a better idea: just make taxes lower for everyone. Make New York friendly to all businesses, not just those that have some pull in Albany.

But … then you wouldn’t have Hollywood movie stars kissing up to politicians and making them feel important. Can’t have that, can we?

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  1. admin

    Sorry Hal, but you are way off here. You may not know, but the circles I run in in NYC these days include a massive amount of entertainment stuff. I’m around a lot of this often.

    Hollywood only brings in EXACTLY who & what they can’t get locally. No more, no less. Hundreds of local people are employed on each of the Law & Order shoots alone. From drivers to PAs to coffe runners to lighting, makeup, sound, even techs and camera people. They rent local equipment when possible, as it’s cheaper than owning, insuring and transporting their own. They spend thousands per day in the areas where they shoot. They buy props, clothing, food, hardware, shit the gaffer tape budget alone is crazy.

    There is a massive, massive amount of local participation in TV and movie shoots in NYC. And pulling that work would make it even harder for actors and techs to survive in that city, which is getting harder every week anyway. Your position would remove yet another avenue of lower paying jobs, and leave more of the city’s economy in the hands of the ultra-wealthy.

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  2. AlexInCT

    Hal, you got this wrong. This regulation is about letting our new aristocracy – the political class – decide what businesses succeed and which don’t stand a chance. Hence the massive subsidy for the industries they like – no matter how ludicrous the breaks are or how stupid the industry is (green energy) – and a reams of regulations and penalties to kill off the ones they don’t like.

    If you donate big to the aristocracy, and they like whatever it is you are doing, you get breaks. Otherwise you are navel lint or worse.

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