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Study: Investment in film pays dividends

Posted April 3, 2014

— Add another film study to the pile of reports lawmakers will have to look at when they return to work next month.

This one, by Robert Handfield, a distinguished professor at North Carolina State University’s Poole College of Management, bolsters the case that tax credits given to the industry help the state's economy. 'Under the Dome' films in Wilmington NC Film Supply Chain Study

The key finding: Beginning in 2007, when the incentive was first enacted, through 2012, the film and television industry has spent $1.02 billion in the state and generated a projected $170,000,000 in tax revenue. The cost of the credit over the same time period was $112,000,000. The result means that, for every dollar of credit issued, the industry generated $9.11 in direct spending and contributed $1.52 in tax revenue to North Carolina.

"The findings are quite clear on these matters and reveal the incentive to be the driving force behind the economic success of North Carolina’s film and television industry," Handfield said.

North Carolina's tax credits for film and television production are set to expire at the end of the year. There are lawmakers who argue the credits should expire and will likely look to other reports, such as a study by the conservative John Locke Foundation think tank that say the film credit costs more than its worth.

However, Commerce Secretary Sharon Decker has said she would like to keep the credit, and lawmakers from areas where there is a lot of filming activity, particularly Wilmington, are poised to press their colleagues to either extend the credits or come up with a new system to help keep film productions in the state.

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  • Eq Videri Apr 4, 2014
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    Sounds great, I'm all for it. When Congress bans all incentives, let us know.

    Meanwhile, North Carolina shouldn't disarm, or we'll lose out to other states. As long as the return on investment is positive, as it seems to be with film productions, then it's a win-win.

    The people who are responsible for jobs and economic growth (mayors, county commissioners, governors, chambers of commerce) accept this fact even if they don't like it, as opposed to talking heads and other pontificators who can afford to wax philosophical beause they aren't accountable to anyone for jobs and economic growth.

  • glarg Apr 4, 2014

    "How is THIS a bad thing?: " The result means that, for every dollar of credit issued, the industry generated $9.11 in direct spending and contributed $1.52 in tax revenue to North Carolina.""

    It depends on if you believe the numbers. The office NC Department of Commerce numbers show a net loss.

  • 12345_here Apr 4, 2014

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    It's not just about profitability, Bob's business would bring in folks at lower paying wages, and quite possibility with less to offer economically and environmentally. If he is profitable so be it. He lives under the tax structure and laws that exists . There are a lot of reason's to have incentives , You want to bring in good people for good businesses, You don't want to wind up like West Virginia.

  • Forthe Newssite Apr 4, 2014
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    I'm just not real sure how our 'leaders' could EVEN consider that this wouldn't help NC....Seems like a win/win to me. WHY we wouldn't TAKE money in our cash-strapped (or so they say) state.....I'm all for it.

    How is THIS a bad thing?: " The result means that, for every dollar of credit issued, the industry generated $9.11 in direct spending and contributed $1.52 in tax revenue to North Carolina."

  • Maurice Pentico Jr. Apr 4, 2014
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    Wrong... Bob's has just as much of a right to build its business in the US as Metlife.. and both should be subjected to the same taxes and regulations as the other. Taxes and regulation should be fair across the board. ALL Federal and States should be operating under the same rules and regulations regarding taxation. So no one State could offer a particular perk over another. The entire State would have to lower taxes for ALL businesses in order to attract new businesses. Not just a particular business. Far too many times we have seen taxpayer money, incentives and subsidies go towards failing industries and line the back pockets of politicians. If everyone is held to the same standards, rules and regulations without subsidies, the free market can work... with smart business thriving, while poor ones ending. Then Bob's would have to be a profitable company, not just subsidized.

  • 12345_here Apr 4, 2014

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    No, you don't want incentives equal. You do not want to attract Bob's slash and crash open pit ore mining at the expense of much greener and viable industries.
    It is much better to give an incentive to Metlife which is going to bring in highly trained and highly paid workers as opposed to some sort of sweatshop labor factory. Incentives are the pork by which all elected officials work under. Especially when working against neighboring towns, cities, counties, states and even nations for jobs.

  • Maurice Pentico Jr. Apr 4, 2014
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    The Federal and State governments should not have the authority to pick and choose which businesses get tax breaks, and which ones dont. The "ends" do not justify the means... as it sets up an unfair advantage for some, and not others. This is a form of cronies capitalism that needs t end. Same for govt subsidizes... the ALL need to end. Let the free market set prices. If States wish to attract businesses, let them lower the tax rates for ALL, not just offer up credits for some.

    And look at the hundreds of billions of tax dollars lost when our govt "invested" in Solyndra, and other "green energy" jobs... or countless other business ventures that later ended up as failures.

  • 12345_here Apr 4, 2014

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    Your post is interesting, but remember the Dell Plan in Greensboro, and the Global Transport Park out east. Sometimes incentives fail to pan out in manufacturing. TV's and Movie productions have secondary tourist benefits, plus bringing workers and their families here to use our other native businesses for supplies and recreation. If the studies show their is no economic benefit to the state, then the subsidies should stop, but all things being equal, a can of sugar to get the humming birds to the feeder provides benefits beyond just economics.

  • raleighboy524 Apr 4, 2014

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    So can golf tournaments, NASCAR races, bowl games, festivals, etc., etc,.

    I get your point but there is a principle to consider -- taxpayer money subsidizing private business is a slippery slope.

  • glarg Apr 4, 2014

    " If any brand-name corporation or business that creates jobs, pays some taxes, and reflects the state within a favorable light needs to be incentivised in order to land those entities, then the state would do well to provide those incentives at the expense of taxpayers."

    A couple of things:
    - the incentive is a rebate, so NC can end up paying more to the production than it ever pays in taxes.

    - Is film the best place to put this money? A Boeing plant will be here for 20 years but film production is inherently a transient thing. Once a production is done it closes its books and next project starts at zero with all the states in the running again.

    - How much should we be giving away to new comers while ignoring our long term employers? IBM shifts employment out every year. Could some of this $79M keep our furniture manufacturers open?

    If we spend money on one thing, we dont have it to spend on something else. Its not a straight forward analysis.

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