Another example of bogus "economic development" justification for corporate welfare. This time with the movie industry | Eastern NC Now

    Publisher's Note: This article originally appeared in the Beaufort Observer.

    The State of North Carolina, at last count, confiscated $84.2 million from taxpayers in the state (individuals and businesses) and gave it to movie production companies to entice them to make their movies in North Carolina, rather than Hollywood or somewhere else. They did so by giving them a 25% tax credit on all their film productions expenses. The idea, as is the case with most economic development "incentives" is that the $84.2 million will generate more than that as a result of the companies operating in North Carolina.

    There was debate last session of the Legislature about eliminating the tax credits. The film industry and McCrory's Department of Commerce vigorously objected, saying the tax credits are actually an investment that returns more to the state than they cost.

    Turns out not to be true. The film companies hired a couple of academics to do a study and they back—surprise, surprise—saying the tax credits produced $1.42 in return on investment from the credits given the companies.

    But hold on. The state's Fiscal Research staff of the General Assembly published an analysis that said that the study was bogus. When the Number Crunchers at Fiscal Research were done they said that the state LOST $45.3 million on the "deal."

    We're not going to quibble over the numbers. We simply are pointing out that the claims the Department of Commerce make about this corporate welfare are simply not true. We've point it out time and time again here. This is but one more example.

    But at least this analysis provided the data. Other claims by DOC do not provide data that can be checked. We've point out time and again that the "tourism" data DOC produces is just a bogus. But in the case of tourism data DOC contracts with a firm that refused to disclose how they came up with their numbers or even what the raw data input was. Smell a rotten mess in the wood pile?

    Even the Fiscal Research analysis gives short shrift to what arguably is the

    highest cost associated with pulling $84.2 million out of consumer and businesses in the state and what might have been the result if that money had been left to those entities to invest in production. We have to wonder how many small businesses went out of business because they could not pay their taxes the jobs lost from sucking that $84.2 million out of those businesses.

    Any valid study would have contrasted how much increased economic productivity would have been achieved by leaving that money for consumer and business use as opposed to redistributing it to making movies.

    But we said we were not going to quibble with the numbers.

    The bottom line here is that film incentives are simply a form of redistribution of wealth through a crony capitalism system of corporate welfare. It should be abolished by the next Legislature.