RSN April 14 Fundraising
FB Share
Email This Page
add comment
Print

Garofalo writes: "For his work in the Hollywood blockbuster The Avengers, actor Robert Downey Jr. will make somewhere in the ballpark of $50 million. But taxpayers should pause when they find out that they covered some of the cost of making the smash hit, sending free money to a huge multinational corporation at a time of economic distress."

The budget for 'The Avengers' was $220 million. (photo: Disney)
The budget for 'The Avengers' was $220 million. (photo: Disney)



The Blockbuster Scam: You're Getting Ripped-Off by Hollywood

By Pat Garofalo, AlterNet

03 June 12

 

State film subsidies are giving away desperately needed funds to well-heeled movie moguls.

or his work in the Hollywood blockbuster The Avengers, actor Robert Downey Jr. will make somewhere in the ballpark of $50 million. His co-stars Mark Ruffalo, Samuel L. Jackson and Scarlett Johansson are also slated to make millions of dollars each for their respective portrayals of Marvel superheroes.

Of course, paydays that high are much easier for a studio to stomach (in this case Marvel Studios, which is part of the Walt Disney Company) when they come after a film has made more than $1 billion at the global box office, as has The Avengers. But taxpayers should pause when they find out that they covered some of the cost of making the smash hit, sending free money to a huge multinational corporation at a time of economic distress.

The budget for The Avengers was a hefty $220 million, but a portion of it was defrayed by $22 million in subsidies that Marvel received from the state of New Mexico. Much of the film was shot at various locations around Albuquerque, New Mexico, and the state has decided to provide a 25 percent rebate for any film or television production done within its borders.

That New Mexico managed to find $22 million to subsidize a major motion picture should raise some eyebrows, considering that, in the last few years, it has cut funding for services for the elderly and the disabled, preschool, higher education, and its state workforce. "We could have spent that $22 million on all kinds of things, like education for our children. We could have spent it on roads," said New Mexico state Rep. Dennis Kintigh (R).

New Mexico is far from the only state providing subsidies for film and television production. In 2010, 43 states spent $1.5 billion on film and TV subsidies. Of the nine films that were nominated for best picture in 2012, five received state subsidies, including The Help, Moneyball and The Descendents.

The common rationale used to justify such a cost is that the subsidies attract jobs and other economic activity to a state that otherwise will go somewhere else, benefiting someone else. However, as the Center for Budget and Policy Priorities found, the subsidies only tend to create short-term jobs. Furthermore, those jobs are filled by already well-off film professionals who come from a state other than the one that's footing the bill:

"State film subsidies are a wasteful, ineffective, and unfair instrument of economic development. While they appear to be a "quick fix" that provides jobs and business to state residents with only a short lag, in reality they benefit mostly non-residents, especially well-paid non-resident film and TV professionals. Some residents benefit from these subsidies, but most end up paying for them in the form of fewer services - such as education, healthcare, and police and fire protection - or higher taxes elsewhere."

The few analyses done of state film and television subsidies have found that their rate of return in terms of economic activity borders on pathetic. For instance, Rhode Island found that it receives just 28 cents in direct economic investment for every dollar it spends on subsidies. A 2005 study by Louisiana's chief economist found that the economic activity generated by film subsidies only offsets 16-18 percent of their cost.

Piling on, in 2007, the Connecticut Department of Community and Economic Development found that its state "will not receive enough additional revenue from increased economic activity to pay for the estimated $16.5 million in tax credits" doled out to the film industry. The New England Public Policy Center at the Federal Reserve Bank of Boston added that "film tax credits do not 'pay for themselves' by indirectly generating additional corporate income, sales, and property tax revenues."

Like many subsidies, those for film and television not only wind up lining the pockets of the already well-to-do, but also end up paying for activity for which they were not intended. Case in point, New Jersey lawmakers belatedly found out that that they were subsidizing the production of MTV's "Jersey Shore," much to the chagrin of Gov. Chris Christie (R). (The state later canceled that particular subsidy.) Other times, the subsidies will go toward projects that would have happened in a particular state anyway, providing a convenient windfall rather than an enticement for production to move.

Even the film industry's lobbying arm, the Motion Picture Association of America, can't find any hard data to support its contention that film subsidies help a state succeed economically. In fact, a recent report by the MPAA in defense of film subsidies cited only a hypothetical $10 million production, not a real film, as evidence that subsidies work.

Fortunately, some states, such as Arizona and Kansas, have ended their subsidy programs, bringing the number of states spending tax dollars on film and television production this year down to 35, according to the conservative Tax Foundation. But other states are doubling down, betting more on the film industry with the economy still struggling in the wake of the Great Recession. That may be a way for Hollywood to get ahead, but it's doing precious little for those taxpayers who are ultimately providing the dollars.

 

Comments   

We are concerned about a recent drift towards vitriol in the RSN Reader comments section. There is a fine line between moderation and censorship. No one likes a harsh or confrontational forum atmosphere. At the same time everyone wants to be able to express themselves freely. We'll start by encouraging good judgment. If that doesn't work we'll have to ramp up the moderation.

General guidelines: Avoid personal attacks on other forum members; Avoid remarks that are ethnically derogatory; Do not advocate violence, or any illegal activity.

Remember that making the world better begins with responsible action.

- The RSN Team

 
+19 # BettyFaas 2012-06-03 19:55
Nobody is worth $50 million for any job!!!! And we can't tax those massive paychecks very high because they "provide the jobs?" I think 80% would be about right. Ten million is more than enough $$ for any project. Then some sensible government funding could be restored. This article shows just how out of whack and immoral our values have become!
 
 
-6 # phantomww 2012-06-04 07:51
nice that you are the one to determine just how much someone can earn on a job. where did the 10 million number come from? why not 2 million, or 500 thousand?
 
 
-1 # paulrevere 2012-06-04 16:28
how nitpicky of you...her point, from my pov, is more illustrative of the largess and discordant rather than the literal as you purport.
 
 
+12 # DaveM 2012-06-03 20:03
States which provide subsidies to film production should receive the same terms as any other investor: a predetermined portion of the proceeds. That said, however, should governments be allowed to essentially gamble with public money? One common rationale is that in return for a subsidy, film producers spend money and create short-term jobs in the state providing it. Speaking only for my home state of Minnesota (not blockbuster territory but a fair number of movies have been made here), I am unaware of any film production which received subsidies from the state and returned more than a fraction of that amount in money actually spent in the state. And of course, only a fraction of that fraction was eventually collected in taxes.
 
 
+2 # jwb110 2012-06-04 09:44
Quoting DaveM:
States which provide subsidies to film production should receive the same terms as any other investor: a predetermined portion of the proceeds. That said, however, should governments be allowed to essentially gamble with public money? One common rationale is that in return for a subsidy, film producers spend money and create short-term jobs in the state providing it. Speaking only for my home state of Minnesota (not blockbuster territory but a fair number of movies have been made here), I am unaware of any film production which received subsidies from the state and returned more than a fraction of that amount in money actually spent in the state. And of course, only a fraction of that fraction was eventually collected in taxes.

@@ million for 1/2% of the gross would be a bid windfall for any state unless you have ever come up against Movie Making accounting. Without a stake in distribution rights you make nothing and the studio makes it all. Subsidizing the film industry is the single dumbest thing I have ever heard of. AND I don't mind how much the actors make. The studios need those names to provide a salable product and they invested not a single dime in creating that box office appeal of the actor.
 
 
0 # paulrevere 2012-06-04 16:34
yep...the behind the scenes, second books are where it all happens...all the film industry is doing is defraying the cost/risk by playing some discordant octive of state financial insecurity that happened to have been somehow married to...A CONNECTION.
 
 
+1 # Rick Levy 2012-06-03 21:53
Another reason not to subsidize studios is that they enhance their revenue from residents where the production is being filmed via the latter's"braggi ng rights".

People are often so thrilled to have a move shot in their locale that they are more likely to spend money to see the full version.

A portion of the "Bourne Legacy" was filmed here in Metro-Manila. You can bet that will boost local theatre attendance and DVD sales when that movie comes to town.
 
 
+14 # sandyclaws 2012-06-04 04:02
Oh c'mon folks, certainly you can see the great importance a culturally and intellectually stimulating movie about super heroes is worth many times over the value of the care of our elderly, the education of our children, and the lost jobs in the public sector. Don't worry about disabled access to watch the movie. I'm sure they will find a way to cram them in after their paid admission!
When are these voters going to wake up and smell what they have been electing?
 
 
+4 # RLF 2012-06-04 04:11
THis is typical and my thoughts for years, as a small business man, is that when the government gives preferential treatment to big corps. over small...it is unequal protection under the law and should be a lawsuit by the ACLU...except they are to busy doing stupid things like supporting money as speech.
 
 
-9 # Urbancurmudgeon 2012-06-04 04:41
Subsidies for the film business, like anything else work or don't work on a selective basis.The key to them being financially effective for any given state lies with the state's own staffing ability. If there are a lot of people in the state that already make a living in the film business than a movie will create a lot of jobs in that state but in the case of a state like CT, most of the cast and crew have to be brought in from out of state because there isn't a sophisticated film community in residence.

AS far as Jersey goes, Christie cancelled that show because it was giving the state a bad name not because it was costing it money. Pat Garofalo should have bit deeper into this apple before going off half cocked. Movies generate a lot more than they cost states and cities when the circumstances are right. Ask Michigan or New York.
 
 
0 # CoyoteMan50 2012-06-04 07:21
Now you know the real fantasy is directly from our "esteemed" 4th estate.
Oh and states lying about being broke. Then giving the money to movie companies.
lol
That'll make that popcorn taste bad!
 
 
-8 # wrodwell 2012-06-04 10:51
Ms. Garofalo's skewed information and the conclusions she draws- especially about New Mexico-are no doubt the result of talking almost exclusively with Representative Kintigh, an anti-film making zealot. New Mexico has a fund of 1.3 billion dollars dedicated annually to subsidizing a variety of businesses and industries. A rather small percentage of this money goes to the film industry while most of the rebates/incenti ve monies go to even bigger industries such as gas and oil production. (Funny how Kintigh and Republican governor Suzanna Martinez, who've both received political contributions from the energy companies, don't complain about those rebates.) Another knock against the film business is that it's "transitory". So what? So is tourism, a very important economic factor in New Mexico. The state recently announced that it had an upsurge in tax revenues and investment income which allowed it to restore some cuts in services. (I wonder if the film biz had anything to do with that?)
The film business is probably the most democratic of the rebate beneficiaries because it spreads money around to a wide variety of local small businesses. These businesses have told me they'd have a real tough time of it if it wasn't for the $$ spent by film productions. The perception that the money goes to overpaid stars is false. Perhaps Ms. Garofalo should come talk with local small business owners and the film workers themselves instead of narrowing her sources so selectively.
 
 
+6 # carolsj 2012-06-04 13:08
There is no reason any gov't should be subsidizing any corporation, be it films, farming, pharma, banks, coal oil, etc. It interferes with free enterprise. If they can't swim without a subsidy, then they should sink.
 
 
0 # corals33 2012-06-06 13:40
film and television are the two most potent agents of propoganda and mass brainwashing and should be seen and rewarded as such, no bitching.We need them to keep the sheeple tuned in to get a dose of the required response and like all good drug addicts they must pay for the privileges afforded them.Try reading a good book instead of this farce called culture and entertainment.
 

THE NEW STREAMLINED RSN LOGIN PROCESS: Register once, then login and you are ready to comment. All you need is a Username and a Password of your choosing and you are free to comment whenever you like! Welcome to the Reader Supported News community.

RSNRSN