In mid-July the John Locke Foundation, a free-market think-tank based in North Carolina, issued a scathing report on the state of the state’s film incentives program, the expiration date for which was recently pushed to 2015.The group, which counts Americans for Prosperity Director Art Pope among its directors and investors, describes itself as “an independent, non-profit think tank that would work ‘for truth, for freedom, and for the future of North Carolina.’” Their most recent victory was helping to support a piece of legislation that bars the state from considering what they call unreliable predictions of rising sea levels when making policy.In the July report by its Director of Regulatory Studies Jon Sanders, the John Locke Foundation claimed that the film incentive program is an expensive and complicated delivery system for “good old-fashioned corporate welfare” and that it costs the state more in tax incentives than it generates in revenue.As one might expect from a free-market group, the Locke Foundation favors across-the-board tax breaks to focused incentives that they say create a favored class of industries and don’t necessarily create a broad base of economic growth.
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Iron Man 3
The report issued by your organization argues, in a nutshell, that the benefits the state enjoys from attracting film productions such as the currently-filming Iron Man 3 pale in comparison to the kinds of benefits the state would enjoy if they suspended that program and cut taxes for industry across the board, is that a fair statement?
How competitive would your proposed, 2% across-the-board tax cuts make North Carolina, in relation to other states with heavy incentives?
How likely would it be to get overall taxes lowered by 2%, as you suggest?
If that happened, how likely would it be that the legislature would drop the film incentives on top of that 2 percent? Won’t the cronyism just continue?
What are some other areas or industries in the state that would benefit significantly from the rescinding of film incentives and reduction of overall taxes?
While your report raises the issue that North Carolina was an attractive destination for productions long before the incentive program was begun, how do you combat the fact that a number of other states and territories have similar programs in place. What’s to stop the producers from taking their show on the road to Georgia or Canada?
The jury is still out on whether or not these things actually generate revenue for the states. I’ve seen reports—not specific to North Carolina, but generally have seen reports—that lean both ways on the question, and none from anybody who doesn’t appear to have an agenda going in. What’s the bottom line in terms of why you guys are convinced the system doesn’t work?
If the incentives were rescinded by the state legislature, the representatives will surely spend the money on something else. They aren’t going to let the extra money lie around. how confident would you be that the legislature would spend that money on something that would provide a better ROI than the film incentives?
Even assuming that the government isn’t seeing direct return on its investment, you’re taking a position that’s bound to be unpopular: should the program be defunded, some people—the number is impossible to predict—will lose their jobs in North Carolina. What do you say to critics who claim now is not the time for legislation that will cost North Carolinians their jobs?
Obviously, as a comic book news website, we mostly see things like Iron Man 3 and the planned Captain America sequel and Guardians of the Galaxy as the things we’re covering. Your report raises a very good point that tourism is fickle when it comes to these productions, but does that make it unpredictable?
What I mean by the question above is: A Good Old-Fashioned Orgy was never going to drive the kind of general interest from the public that a movie like Iron Man 3, with the potential to drive $1 billion in global revenue, will. That seems as important a distinction as the free rider problem, doesn’t it?
The part of the program that issues “refunds” if the tax credits exceed the production’s tax liability seems just absolutely insane to a lot of people. Even assuming that it isn’t easy to end, or dramatically reduce, the program, what is it that keeps that clause from being excised the next time this comes up for debate in 2014?
Removing the refund portion of the incentives: What would that do, in terms of the numbers? Would it make the overall program acceptable, if the across-the-board cuts were off the table?
From the outside, it’s hard not to see this as an extension of other issues. Republican governors have been trying to cut these programs and Democratic governors have been trying to reinstate or increase them, per your own report. Certainly Hollywood is no great friend of the Right. Is there anything you can say to persuade those of us without a horse in this race that it’s not about the Left supporting their friends and the Right trying to cut them off at the knees?
