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16 film parasites of Iowa

December 16, 2008

Iowa's unspeakably generous film subsidies have lured 16 corporate welfare seekers to make films here, according to this fluff piece from KCCI.com. At a time when the state has cut $100 million from current year spending and faces a quarter-billion shortfall in next year's budget, Iowa still finds it worthwhile to subsidize up to half the costs of films made here - a subsidy even more generous than Michigan's budget-busting film credits.

The Tax Policy Blog tells it like it is:

Because the costs and benefits aren't estimated and studied—either before or after implementation—tax incentives commonly end up channeling taxpayer dollars directly into the pockets of rent-seeking film companies, generating no corresponding economic benefits on a net basis.

Ultimately, the main beneficiaries are not taxpayers but lawmakers. Every incentive package that attracts a rent-seeking company allows lawmakers to make public announcements taking credit for "new jobs." Location-based incentives can therefore be thought of as a market transaction between lawmakers and film companies. Lawmakers purchase favorable media coverage for themselves, film companies accept payment for filming in economically unprofitable places, and taxpayers finance the deal. It's hard to see how that's good policy.

No doubt the A&W in Indianola profiled in the KCCI story will become a film tourist mecca, just like Downtown Des Moines.

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