Like rubes rushing the patent medicine wagon, the Iowa House almost unanimously voted for a rich special interest giveaway for the film industry yesterday. By a 95-1 margin the House approved HF 892 to provide a 50% subsidy to film projects, and then some:
- A 25% tranferable tax credit for expenditures on a film project;
- A 25% credit for investors in film projects; and
- a tax exemption for sales of goods and services to film projects.
Because the credits are transferable, the filmmakers can sell them to finance their projects. This feature makes this tax credit a subsidy, rather than just a tax break.
If it weren't tax season, I would spend more time pointing out just how absurd this thing is. Why is this one industry - an itinerant one that leaves nothing behind but empty fast food wrappers - somehow worthy of being subsidized by every other business? The standard line about how much the filmmakers bring to the economy can be said about any business - more so, in fact, about the ones that stay here and provide permanent jobs, and who end up paying for this subsidy.
A puff piece for the bill in the local business paper says:
Supporters point out that the tax incentives do not take funds from the state, but rather lower the amount of taxes producers and investors pay.
Nonsense. From a business and accounting standpoint, this is delusional. It's like telling a businessman that if he doesn't collect his outstanding business receivables, he doesn't really lose anything. The state is out the money as surely as if it wrote a check, and the rest of us have to pay that much more to make up the difference.
The bill now looks like it will surely pass. Follow the progress of this and every other piece of foolish tax legislation at our 2007 Iowa Tax Legislation page.
Link: Prior Tax Update coverage.
UPDATE: The House roll call on HF 892 shows that Bruce Hunter of Des Moines is the representative who stood alone for the taxpayers on this one.
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