We hear a lot about the need for tax incentives to lure film projects to the state, but some critics say the incentives just don't make fiscal sense.
Contrary to popular belief, the film industry actually costs the state money. According to estimates from the state legislature, the current 25% film tax credit costs North Carolinian's 20 million dollars a year….and that figure is projected to rise 75 million dollars a year by 2013, if more projects come here to film. That's because our tax incentives are structured as refundable credits, and in many cases, the state actually writes film production companies a check for coming here.
Say a California based production company comes to North Carolina and spends 10 million dollars on a film. Since they don't actually owe taxes to North Carolina, the state would have to cut the company a check for $2.5 million, to cover the 25% incentive.
Proponents of film incentives say it's worth it, since films create jobs, and crews spend money in the cities where they're working. But critics say those jobs are temporary, and can be drawn away when a neighboring state introduces more generous incentives.
While the film industry certainly has a certain "cool" factor, it may be hard to justify spending 20 million dollars a year on incentives, especially in a time when the state may have to lay off teachers because of budget constraints.
Because state budgets are stretched so thin, some states are re-thinking their film incentive programs, but here North Carolina, legislators have actually introduced a bill to lift the caps on the current film incentives, making them more attractive to film makers, but more expensive for taxpayers.