More from the Annals of Film Tax Credits

Jack Carver swings out against the state's film tax credits in a piece yesterday at the Isthmus. Not surprisingly, I don't find it a very helpful way to think of the credits.

Let's start with Carver what seems to believe is the central purpose of the credits: to entice Hollywood movies to film here in Wisconsin. That may be one of the results, but can't be the goal. The actual purpose of the credits is to help create a self-sufficient film industry here in Wisconsin.

These things take time and there are a number of Wisconsin-specific issues that make building a film industry difficult (like the weather). Credits are best looked at as being seed money for a start-up. No, you're probably not going to see much of a return in the first few years, but after a while the dividends should start paying off. Only in this case, the money isn't just being used to kick start a company, it's trying to start and an entire industry. There will be growing pains.

This is why comparing the film credits to those offered to traditional manufacturing companies like Harley or Mercury Marine isn't exactly comparing apples to apples. Let's face it manufacturing credits are basically tax-payer funded bribes to keep companies here. Film credits are also essentially bribes, but they 1.) bring people to Wisconsin and 2.) create and infrastructure and train current residents to make movies so that someday we will be able to make them ourselves.

Right now current credit cap is set at $500,000 which is hardly "dolling out cash like the Pentagon." Even when the state refunded $5 million in the first year of the program, it still represented a nearly negligible portion of the budget. Nearly every industry in Wisconsin receives some sort of economic assistance from the state: the film folks are asking for their piece of the pie.

Carver goes on to summarizes the arguments for the credits thusly:

The defense of the program, as I see it, stems from two arguments. First, if any economic benefit to the state can be foreseen, then a generous subsidy may be the only way to entice film crews to Wisconsin, since just about every other state has been engaged in a vicious rat race to give welfare to Hollywood. 

No. The credits exist to provide an incentive to compensate for Wisconsin's inherit deficiencies in film-making, like climate or a complete lack of sound technicians. There's nothing anyone can do about winter in Wisconsin, but, over time, there will be something the state can do about the complete lack of sound technicians in the state or dearth of indoor studio space. Tax credits help Wisconsin catch up.

Second, there is the cultural element. Can the production of a film in Wisconsin promote the state, its natural beauty, its cities, etc? 

This is where Carver starts to veer off the road. The point of establishing a film industry in Wisconsin is not for promotional purposes. If it were, the credits could probably just straight out of the Tourism advertising budget.  The credits should be designed to help create a profitable industry that creates entertainment products people want to buy. If that means turning downtown Racine into a post-apocalyptic hellscape populated by mutant zombies, so be it. Which is why this next graph is just silly:

Here's an idea. Offer tax credits to companies who will shoot films that are set in Wisconsin, rather than to those who use Wisconsin as a stage for another location. Never, for instance, should a movie that takes place in Minnesota be subsidized to shoot in Wisconsin. It's imperative that every viewer knows that those inviting blue lakes in the background are ours, not theirs. 

It's really not. Georgia's film commission requires any recipient of tax credits to attach this logo to the credits.

It's actually a brilliant idea: the logo is so bright and big that it's nearly impossible to miss and as a result I know that "The Walking Dead" and "Archer" are both filmed/animated in Atlanta. It's really no different than knowing that the Saturn I used to own was built in Tennessee because there was a sticker on the inside of the door.

But I'm getting off point. Most people, and it sure seems like Carver falls into this group, usually subscribe to two fallacies about entertainment: 1.) that it can only be created in New York, LA or Nashville and 2.) that it is created through some kind of voodoo. Actually, it can be created anywhere and is shockingly as mundane as any other business. And just like any other business, investors want to see their money spent wisely. I've heard that it's a lot easier to win financing for film projects simply by telling investors that filming will take place in a location that offers tax credits, regardless of how lucrative the incentives actually are. There were something like two dozen films -- mostly small pictures with budgets well below $10 million -- with at least an interest in filming in Wisconsin when the tax credits began and nearly all of them bailed once the program was curtailed.

Again, even back at its original level of between $5-10 million a year is probably comparable to what the state wastes every year by not having a film industry.  The UW system has no less than three schools with Radio, TV and Film departments that are essentially useless in Wisconsin (unless you want to be a DJ). It costs the state somewhere in the neighborhood of $150,000 to educate someone from kindergarten through college: if any one of those students want to get into the film industry, they have to leave the state and take its investment in them with them. Anyone want to bet that between 25-75 of the thousands of kids graduating in Wisconsin this month head on out to Cali to give the movie business a shot?

The problem with the original film tax credit program is that the people who bought into it thought it was a fun and sexy way to induce famous people to Wisconsin so they could spend like, well, movie stars. They were wrong, but instead of tweeking the program they thought it would be easier to just scapegoat the "Hollywood welfare" queens because that was the easy thing to do. Unfortunately, the smaller, local filmmakers for whom every dollar is squeezed to death and who were depending on the program got screwed.

So the first thing Wisconsin needed to do, but didn't, was to establish realistic goals and expectations from the program. Carver notes that Louisiana shelled out big bucks for The Curious Case of Benjamin Button, but this was the plan Louisiana set for itself almost a decade ago. It wanted to be a major producer of films and was aggressive in doing so. Last year it dropped $100 million on just four movies. While that should seem ridiculous to just about anyone, Louisiana did some early targeted tax crediting for film infrastructure which paid off. Today it's one of the largest production hubs outside of California.

Wisconsin probably isn't capable of being that kind of producer, nor would it probably want to be; but, again, this is part of the problem of looking at the tax credits in a strictly tit-for-tat economic analysis. Think of the credits along the same line of building a small park with a playground in a neighborhood: it doesn't provide a business service or immediate economic value, but it does increase the property values of the nearby houses and keeps the kids from having to go to other parks across town. The credits serve as a buttress against the immigration of the creative class from Wisconsin. That alone should be worth $10 million a year.

There's really no reason why a more finely tuned credit program can't succeed in Wisconsin, so long as the lessons learned from the first go-around are implemented. These include, but aren't limited to:

• Very detailed and specific declarations of what expenses and salaries qualify for the credit.

• Training for government officials conducting the oversight and auditing.

• Estimates of projected costs provided to the state before filming begins.

• Sunset the program after 10-15 years. (This should be more than enough time to get the film industry moving in Wisconsin)

The bottom line is that most people treat filmmakers -- and especially local filmmakers -- like children running around with their parent's Super 8 camera: it's cute and fun, but incomprehensible how someone can make a living doing it. Since most people don't understand how their neighbor could make a living being a filmmaker they see no economic or social value in the occupation and therefore don't see it being worth of the same kind of tax protections as the manufacturing company that probably won't be around in 20 years any way.

So there. We've talked about this issue here, here, here, here, and here. I know this is a losing issue, but I'm still always disheartened by the uproar this issue causes. The state gets bilked for hundreds of millions of dollars every year in fraud, bullshit tax breaks to people and corporations that don't need them, unaccountable programs and overpriced public works projects, but suddenly everyone shits their pants over $5 million bucks because it went to a walking scapegoat (rich, out-of-state, showbiz folk!) and gives folks the chance to beat their chests. It's so fucking predictable.