The state of Georgia has been known as “the Hollywood of the South” thanks to the state’s film incentive scheme. As a means of stimulating economic development, state governments offer film incentives in the hopes of recruiting productions that will bring in new revenue streams, create new employment opportunities, and lay the groundwork for a sustainable film industry in the state. Promoting the area as a tourist hotspot may improve the state’s tax base and, thus, its earnings. Therefore, this essay will analyze Georgia’s film incentive scheme.
Up to 30% of a production company’s expenditures in Georgia for filming purposes are eligible for reimbursement under the program. In addition to the standard 30% tax credit, the program offers an additional 5% bonus tax credit for works that include the “Peach State” logo in the closing credits. It is worth noting that the scheme allows for an additional 10% tax credit if the production company includes a Georgia promotional symbol in the end credits. There is also a sales tax exemption on production-related expenses and a payroll tax credit if more than half of the crew is hired from Georgia (Griffin & Kieffer, 2022). DOR is responsible for the implementation and administration of the credit, including the management of carryforward periods, credit levels, transfers, and sales to other taxpayers. DOR conducts cost audits to ensure production is at the estimated price (Griffin & Mcguire, 2020).
Since most production businesses cannot utilize all of the credits, they are permitted to sell any Georgia income taxpayer their unused credits. As part of the funding of a project, production companies offer these credits to individuals, trusts, and corporations. The buyers will pay less in taxes and can use that extra cash to support their enterprises. Taxpayers have expressed concern about this transferability provision since it enables production businesses to receive tax credits for money they would have spent in Georgia. As a result, rather than funding public projects, the state is subsidizing private firms.
The Georgia program has a variety of implications for local governments. On the one hand, the program helped the local economy by attracting millions of dollars in investment and generating thousands of employment. Georgian film and television productions brought in more than $4 billion in 2022, claims Mazeke (2022). On the other side, the tax credits have taken funds away from public projects like infrastructure and schools, raising worries that the program will only last for a while. Additionally, several allegations of fraud and misuse of the program have prompted calls for increased regulation and control.
A recent audit by the state auditors of Georgia found that Georgia provides more incentives to producers of television shows, movies, and video games than any of the other 31 states that do. For instance, New York provides a 30% tax credit, but it is only open to shows that spend at least 75% of their budget there. California provides a 20 per cent tax credit for film production; however, the credit may only be used once and is only worth $100 million annually (Meares et al., 2020). In Georgia, there is no minimum spending restriction or limit on the total amount awarded to the film incentive program.
The controversy surrounding the 2020 election cycle and the subsequent changes to Georgia voting procedures prompted an investigation into the state’s film incentive program in 2021. The production in Georgia is being boycotted because of a bill that drastically restricts voting access and unfairly affects Black and minority voters. Because of the outcry from directors, actors, and producers, major film and television productions avoided the state. The Georgia film incentive program lost out on millions of dollars in potential revenue as a result.
While the Georgia film incentive program has not been without its share of criticism, it has ultimately proven beneficial to the state’s economy. According to the state’s Department of Economic Development, the film industry contributed $9.5 billion to Georgia’s economy in 2018. More than 92,000 employees in Georgia are directly or indirectly related to the film and television industry, according to the Motion Picture Association of America (Bradbury, 2019). Moreover, the program’s tax credits and incentives have brought large film and television productions to Georgia, raising the state’s profile as a filming location.
The entertainment sector has swayed state governments by employing incentive programs like Georgia’s film incentive. Companies working in the film industry have successfully lobbied for increased tax credits, which can generate significant revenue for the state. Corporations in other industries, such as technology, have also utilized financial incentives to shape public policy at the state level. McCartney (2018) of the Washington Post reports that Virginia has offered Amazon a $2.4 billion incentive package to move its headquarters there.
In my opinion, authorities at the state and local levels should pay attention to these concerns. Providing incentives to businesses and stimulating economic growth can provide much-needed funds for states. However, authorities should check that these incentives are not putting an unnecessary financial strain on the public.
In conclusion, film tax credits are valuable tools for fostering economic growth. The Georgia film incentive program has proved that financial incentives may be utilized to successfully entice film production, which can yield substantial economic advantages for the state. Though, officials should check that the incentives are not overburdening the public coffers and are helping the intended groups succeed.
References
Bradbury, J. C. (2019). Film Tax Credits and the Economic Impact of the Film Industry on Georgia’s Economy. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3407921
Griffin, G. S., & Kieffer, L. (2022). Impact of the Georgia Film Tax Credit. https://www.audits.ga.gov/ReportSearch/download/28730#:~:text=As%20shown%20in%20Exhibit%201%2C%20the%20credit%20reached%20approximately%20%24961
Griffin, G., & Mcguire, L. (2020). Georgia Department of Audits and Accounts Performance Audit Division. https://www.audits.ga.gov/ReportSearch/download/23486
Mazeke, K. (2022, August 1). Georgia’s film & TV productions earned over $4 billion in 2022, an industry record. WJXT. https://www.news4jax.com/news/georgia/2022/08/01/georgias-film-tv-production-earns-over-4-billion-in-2022-an-industry-record/#:~:text=Georgia-
McCartney, R. (2018). Amazon HQ2 to benefit from more than $2.4 billion in incentives from Virginia, New York and Tennessee. Washington Post. https://www.washingtonpost.com/local/virginia-news/amazon-hq2-to-receive-more-than-28-billion-in-incentives-from-virginia-new-york-and-tennessee/2018/11/13/f3f73cf4-e757-11e8-a939-9469f1166f9d_story.html
Meares, W., Hutton, A., Brown, S., & Morris, R. (2020). Show Me the Money: An Analysis of Georgia’s State Film Tax Credit Program. QUESTIONS in POLITICS, VII. http://gpsa-online.org/wp-content/uploads/2020/09/Meares_etal.pdf
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