- Days left
Ready, set, action!Ever wonder why so many television series are filmed in New York or Vancouver, Canada? Well, you'd shoot there too, if they offered you the cornucopia of cash savings that these areas do. Why? Because most states and some countries embrace the common wisdom that television productions bring big bucks to the local economy. This is also why the host locations for two major television series (Law and Order in New York City, Lost in Hawaii) are singing the blues as these two series come to an end.

Hard numbers about the economic loss are difficult to come by (more about that later), but, according to Bizjournals, Hawaii estimates that Lost pumped $400 million into the state's coffers during its six-season run. It reportedly employed more than 2,000 people in the last shooting year, and bought airliners-full of food, paint, wood, and other set supplies as well as renting fleets of vehicles and paying for lodging.

The original Law & Order brought New York City approximately $1 billion during its 20-year run, according to the Mayor's Office of Film, Theater and Broadcasting as reported by New York Magazine.

Given these juicy figures, it's no wonder that 41 states, numerous local communities and other countries now offer financial incentives for American TV and movie productions. In a game of one-upmanship, these entities vie by offering rebates on local labor, sales tax, production venues and services, as well as cooperation in getting access to venues.

Obviously, the wisdom of extending such largess to the industry depends on measuring the return. Do these towns, states and countries eventually recoup the lost tax revenue from the local companies that benefited from the increase in business? If not, does the production provide jobs, or does the money it spends recirculate enough to offset the investment?

Not according to a recent paper by professor Susan Christopherson of Cornell University and Ned Rightor of MXCIX. They point out that good measurements of this economic impact are almost impossible to find. Those people in the business of promoting film bureaus find them using ephemeral mulitpliers to "prove" that the tax breaks were justified, while other branches of a state government, such as the tax collectors who run their own numbers, find just the opposite.

The pair cites a Connecticut government study that found that 8% of the money invested came back to the state as tax revenue. Another study in Louisiana found revenue returns were only 16-18% of the money paid out. The Wisconsin Department of Commerce published a study using the Johnny Depp movie Public Enemies, filmed in the state. It concluded that it cost the state $925,467 of incentive money for each job created. Shortly thereafter, the state ended the program.

Christopherson and Rightor also point out that many of the jobs created are transitory, gone as soon as the production ends, and that to secure repeated business, states and communities would need specialized support such as sound stages and video-savvy labor. How can the latter be maintained if the business is episodic? With state support?

There is a certain pride a community can derive from seeing itself featured in a movie or television program. As a job creation and economic development initiative, however, proponents my have gotten Lost in the numbers, and passed laws that are bringing disorder to local budgets.

Increase your money and finance knowledge from home

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

How to Buy a Car

How to get the best deal and buy a car with confidence.

View Course »

TurboTax Articles

A Brief History of Income Taxes

Did you know President Abraham Lincoln, one of America's most beloved leaders, also instituted one of its least liked obligations - the income tax? In this brief history of taxes, see the historical events which shaped income taxes in the United States today.

What Is a Schedule M IRS form?

Note: The content of this article applies only to taxes prepared for 2009 and 2010. It is included here for reference only. In order to take the making work pay tax credit, the IRS requires you to prepare a Schedule M with your federal tax return.

Video: Tax Filing Requirements for Children

Depending on how much money they made during the year, your children may very well have to file for taxes. Learn about tax filing requirements for children with help from TurboTax in this video on tax tips.

Add a Comment

*0 / 3000 Character Maximum