Filmmakers' tax saving costs Pa. residents

Last year, we only gave $10 million, and not enough movies were made to satisfy Metro-Goldwyn-Harrisburg.

So the state subsidy -- the people's contribution -- is up 650 percent. It has become one of the largest programs of its type in the nation. Filmmakers galore are apparently catching the scent of money. They want to come to the state and roll 'em.

Moviemaking thus is following an old industrial pattern here. Once a sink-or-swim proposition on the risk-taking of producers and investors, now it will do business in Pennsylvania only if the public pays part of the freight.
The new Pennsylvania pattern is that nothing seems to get built, or even relocated, without politicians leaping in to "help" with your money.

How does it work with Hollywood and "indy" filmmakers? Easy. With a tax saving. Spend at least 60 percent of your filmmaking budget in these borders, and you can take 25 percent of expenses as a "transferable tax credit."

Wait, let's repeat that ... aw heck, let's not. Just have an accountant with you.

And be ready to open your books to whoever approves the credit in a state where capitalism used to be in vogue. Never mind its chronically laggard economy, Pennsylvania keeps following the centrally planned model that even Russia and China now scorn.

Movie subsidies aren't new, but they got their big boost from the Legislature last July. The aim must be to project Pennsylvania's beauty out into the world and to make jobs -- for acting "extras" and union trades -- wherever lights, camera and catering trucks set up.

The downsides aren't advertised. Traffic disruptions are one. But bigger yet is the "opportunity cost of capital." What if more jobs and positive multipliers followed $75 million being spent somewhere else? Or not spent at all? Left in the citizens' pockets. But moviemaking quickens the political pulse.

And subsidies do seem to be a hit, short-term. The Associated Press said that 90 film applications have come in since July. Ten movies are in production. The Pittsburgh Film Office cites a "fever pitch" for the money; the size of incentives is given as the first question of any production company. "We have scripts coming in every day," said a source there.

But is this a function of state or city government?

If it is, a mischievous thought arises. Filmmakers shouldn't just use our geographical "locations" but our people, too. Imagine a movie of the mostly elderly. Young folks have followed job opportunities out of here for decades. And after 70-plus years of one-party rule and population decline, could it be time for a sequel to an old made-in-Pittsburgh cult classic? Working title: "The Night of the Political Dead."

Retired business editor Jack Markowitz writes Sundays and Thursdays. E-mail him at jmarkowitz@tribweb.com.

http://www.pittsburghlive.com/x/pittsburghtrib/business/columnists/markowitz/s_542694.html

Images and text copyright © 2007 by The Tribune-Review Publishing Co