Georgia's Film Tax Credit: A Peach or a Pit?

• In Event: 3.02 Government Research Concurrent Session: Healthcare (Gov't & NPO) & Other - Cases

Abstract

Many of the biggest blockbusters at the box office in recent years: Avengers: Endgame, Infinity War, Black Panther, The Hunger Games: Catching Fire, Mockingjay Part 1, Part 2, the Marvel superheroes: Ant-Man, Thor, Spider-Man, have all been filmed in Georgia. Collectively, the top twenty movies filmed in the state since 2008 have grossed more than $10 billion worldwide. Ninety-seven films have each grossed over $35M. Since FY 2010, movie production companies have made a total direct capital investment of almost $19 Billion in the state, and the total value of tax credits provided is $5.5 Billion. Georgia offers up to 30% in credits, which are transferable, and, unlike other states, there is no maximum on total credits in any year. Georgia provides the largest film tax credits in the country. Broderick Johnson, producer of the award-winning movie, The Blind Side, said, 'The magnitude of Georgia's tax break is one of the best, if not the best in the country.’ With significant cost savings, Georgia is now considered the Hollywood of the South. However, the incentive that draws movie productions comes at a cost to the state’s treasury. Is the juice worth the squeeze?
This case has three learning objectives:
1. To understand the use of tax policy by government to incentivize economic development.
2. How to assess the effectiveness of government tax credit in relation to public return on investment.
3. Gain a better understanding of government tax credit.
The case focuses on the impact on Georgia’s economic development, from two different studies. The first study from the Center for Economic Development at Georgia Tech says the credits have had an impact of $4.2 billion, directly and indirectly. However, the second study, by the state department of audits, says the impact is only $2.8 billion, after considering the opportunity cost of the impact the state would have had by funding other state priorities.
The case asks four questions:
1. Why would a state offer tax credits?
2. Is there a difference between a tax credit for the film industry versus a corporate relocation tax credit?
3. How would you assess the impact of a state tax credit? (Quantitative, Qualitative)
4. Are there ways to strengthen the Georgia Film Tax Credit?
The tax credit remains popular in Georgia. While class discussion included alternative uses for state funding, a concluding poll showed majority support for the credit, with suggestions for improvement.

Author

• Usha Rackliffe, Emory University