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Government takes your money to give to others. The others take it. Success!

August 19, 2009

Kathie Obradovich falls for the broken window fallacy about halfway through this post:

State tax breaks will take a bigger bite out of revenue than previously estimated — about $478 million next year, the Register reports. That’s about 50 percent higher than last year. The biggest jump has come from the movie tax credit, which lawmakers sweetened in an effort to attract more films.

It worked — feature films starring the likes of Adrien Brody are being shot here. The news is sure to have lawmakers revisiting that tax break and possibly others. It’s appropriate to ask what Iowa is getting in return for the credits. How much of this business activity would be here anyway?

In the case of the movie credits, we already know the answer — almost none. So unless the state is giving away more in credit than movie companies are spending in Iowa, the break may make sense.

Yes, we see what films get made before the film crews leave town and the temporary film jobs go away. What we don't see is what could have been done with that money in other hands, but common sense tells you Iowans spend their own money better than the legislature does. How many Iowans would give their money to film producers for nothing if they didn't have to as part of their taxes?

Related: Hello, Hangover!