Kansas Governor Laura Kelly’s budget from January contains a blockbuster-sized flop of a policy. The budget proposes a “Creative Industries Tax Credit” capped at $10 million annually beginning in FY 2023. The policy offers film companies tax credits based on the size of production and local involvement in the state. However, incentives like this for film companies notoriously pay out more to film producers than states take in through revenue.
Multiple studies conducted independently from film companies have found minuscule returns on taxpayer film investments. Across the 40 states which offer film incentives, none of them have seen more than 30 cents returned for every dollar invested – Connecticut saw only 7 cents of return from every taxpayer dollar put in. These small returns aren’t worth the investment and take money away from providing core government functions. In 2011, Louisiana spent more money on film incentives for “Green Lantern” than it gave to the University of New Orleans. Of Georgia’s $5 billion in film subsidies, 88% of the film tax credits went to non-Georgia companies and 53% of the labor income went to workers from outside of the state.
As states throw millions of taxpayer dollars into the air, the real winners are the film companies who get to line their pockets. While Kansas could serve as a beautiful setting for certain films lush with farmland or that “Great Plains” feel, it’s unrealistic to believe that the state could properly compete with historic centers of film like Hollywood or New York with billions of dollars of entrenched capital. Taxpayer dollars should go to help taxpayers, not pay off big corporations. Similar to the multibillion-dollar mega subsidy approved by the legislature and Governor Kelly, the money spent on film subsidies would be better off kept in the pockets of Kansas taxpayers and businesses to spend and grow as they please.
Though $10 million is relatively small compared to the state’s roughly $8 billion General Fund budget, there’s a long list of alternatives of where the money could go, ranging from supporting an underfunded program or giving back to taxpayers. This mindset of minimizing wasteful spending should be applied across the budget. The person who knows best how to spend taxpayer money is the taxpayer themselves. Furthermore, economic growth is promoted when businesses and consumers have more money to spend where they choose, hence why keeping low taxes is important of facilitating growth.
Large business subsidies contribute to Kansas’ highest effective tax rates on mature businesses. These subsidies haven’t corrected Kansas’ 6th worst rate of private job creation in the country. Taking a pro-growth mindset by creating a healthy tax environment would be a course correction for Kansas.
