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Can Iowa survive a limit on its subsidies for Hollywood?

April 10, 2009

It's suddenly occurred to our legislators that our current no-limits subsidy program for filmmakers may not be entirely wise. The Des Moines Register reports:

Companies that create high-quality jobs in Iowa, film movies or television shows in Iowa, or invest in a targeted areas would collectively have to split $175 million a year in tax credits, under a plan before lawmakers.

Maybe this means some legislators finally are beginning to realize that "tax credits," and especially "transferable tax credits," is just another way to say "spending." For example, the outfits that generate film credits often have no Iowa source income, so they sell the credits at a discount to people who do. It's just as much a loss to the state as if somebody drove an armored car full of income tax deposits into the Mississippi - and with about as much long-term economic benefit.

Another way to look at it: it's spending in the same way as the Democrats' proposed $100 per-college-student beer money tax credit.

Unfortunately, the learning curve at the statehouse appears to be steep:

Republican lawmakers said this would thwart growth if the state caps the tax credits.

The more you spend, the more you save? With that kind of budget outlook on the supposedly thrifty side of the aisle, it's no wonder the state is having money trouble.

Tags: corporate welfare.economic development.Iowa tax policy.tax credits.