Film-tax credits: New York subsidies equaled $40,800 a job

| Democrat and Chronicle

ALBANY – New York’s film industry produced about 43,000 direct jobs over the past two years, but it came at a significant cost to taxpayers, a new report showed.

The jobs are being subsidized with nearly $1.8 billion in tax breaks pledged over the two years, equaling about $40,800 a job in 2017 and 2018, the state-funded analysis showed.

New York budgets the most in the nation for its robust film-tax program, providing studios as much as 40% back on their production costs.

Critics have long blasted the program as being corporate welfare for an industry that already had a major foothold in New York.

But supporters said the industry has boomed since the tax credit was bolstered to $420 million a year in 2008 and has since been extended repeatedly by the state Legislature and Gov. Andrew Cuomo.

The subsidy per job over the past two years was slightly less than it was in 2015 and 2016, when it totaled $42,300 a job.

Largest subsidy in New York

The film-tax credit and a post-production credit generated $8 billion in direct spending in New York in 2017 and 2018, resulting in 85,800 direct and indirect jobs, the report by Saratoga-based Camoin Associates for Empire State Development, the state’s economic-development arm, said.

“The Film Tax Credit has attracted a record-breaking number of productions to the Empire State year after year, bringing in thousands of jobs and billions in spending that, without our program, would have gone to other states,” Empire State Development said in a statement. The subsidy for the film industry is the largest New York offers to any business sector, and the tax breaks have added up.

The CBS drama Elementary was paid nearly $81 million by New York for seasons two through five, the most of any production. CBS’ crime show Blue Bloods got $79 million for four seasons, while NBC’s crime thriller Blacklist received $63 million for its first three seasons.

Even NBC’s Saturday Night Live has reaped the benefits of the program, receiving $42.7 million in tax breaks in recent years despite being “Live from New York” since its inception nearly 44 years ago.

Critics question tax breaks

Saturday Night Live receiving New York tax breaks is an example of a show that would have stayed in New York regardless of the incentives, critics said.

“The big question is how many jobs did the state’s huge film and TV subsidy create that wouldn’t have naturally been created?” said John Kaehny, executive director of Reinvent Albany, which has railed against public subsidies.

“We continue to believe that the film and TV subsidy is a gigantic, unfair taxpayer giveaway to some of the richest people and most lucrative industries in America.”

The state-funded report looked at both direct and indirect jobs it claims were the result of the film-tax credit: 43,400 direct jobs and 42,500 indirect ones.

A job, though, was defined as any position full or part time in each of the years. And the report counted as two jobs a worker who was employed in 2017 and 2018, or was employed for a period of time, then took time off and was rehired.

If both direct and indirect jobs were included, the total subsidy per job would be about $20,600.

State officials, though, point to the overall economic development produced by the program, saying films and shows can go anywhere to shoot. Other states have found that when they cut back the subsidies, the productions move to states with better deals.

The report said New York is getting a rate of return of $1.08 for every dollar spent on the program, when tax revenue is factored in.

The post-production credit, however, produced a rate of return of 86 cents for every $1 of tax credits issued.

Debate tax subsidies

The report showed that the tax breaks are largely concentrated in New York City, where the refund is 30% on production costs. To lure shows and movies upstate, a 40% rebate is offered for productions that come to the region.

Nonetheless, 90% of the work was done in New York City over the past two years, the report said.

Some lawmakers have questioned whether New York should continue to dole out lucrative tax breaks to the film industry, and because the industry is concentrated in New York City and to some extent the lower Hudson Valley.

The issue of state subsidies gained prominence in recent months.

A deal for Amazon to build its second headquarters in Queens was beaten back by local opponents in part because of $3 billion in job-creation incentives offered to the online retail giant.

Sen. Jessica Ramos, D-Queens, said she supports the tax breaks for the film industry, saying it produces strong, middle-class jobs that are mainly unionized, including in her district.

Amazon fought unionizing its proposed new headquarters in Long Island City, and Ramos was a vocal opponent of the deal. “The difference with this tax incentive is that we’re not subsidizing a corporation,” she said Wednesday at the Capitol. “We’re subsidizing an industry that keeps jobs here in New York, and they are good jobs at that.”

New York has dished out more on film-tax credits since 2003, about $5 billion overall, than it would have on the Amazon deal, E.J. McMahon, founder of the Empire Center for Public Policy, a fiscally conservative think tank in Albany.

McMahon wrote in February that politicians support the tax breaks for films in part because of the allure of Hollywood and the campaign cash the industry gives out.

“Any industry offered reimbursement of 30% to 40% of its production costs would create jobs in New York,” he said.

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