SADOW: Donate More, Lose More

Maybe they’re feeling the heat, so look for an effort by the single most sybaritic special interest in Louisiana to attempt to buttress the hundreds of millions of dollars annually it lifts from taxpayers prior to the next session of the Legislature.

The Louisiana Film Entertainment Association has announced plans to commission a study on the economic impact of the state’s motion picture investor tax credit. Since its inception in 2002, the program has seen over $1 billion dollars go out the door in lost collected tax revenues as a result, which comes as a result either of exercising these credits or, as what occurs with the vast majority of dollars involved because the awardees of them almost always are from out-of-state and owe little Louisiana tax liability as a result of making a movie, selling them to Louisianans with high state tax burdens (including state elected officials).

Through 2012, the state had only gotten back about $120 million, in terms of additional tax revenues recouped, of the $800 million that had been then paid out, or just 15 cents on the dollar. That meant that each direct job created by the program cost the state $36,000, which is hardly cost effective. In other words, from the start the program has served as nothing more as a conduit of the people’s money to a handful of individuals – many of them nonresidents – to pay them to do what they want to do, not for investing in what was most efficient for the maximal economic development of Louisiana.

But these wealthy folks don’t want their gravy train to end, and that’s part of the reason the LFEA exists, to lobby to keep things rolling for them. And given that, unlike almost every other tax exception that exists in the state, the law requires that on a biannual basis a report is produced analyzing the cost effectiveness of the program (which is why it’s known how wasteful it is) and the next edition of it is due out in 2015, the industry is trying to get out ahead of that by coming up with its own report to counter the expected dismal return that once again will be found.

The past reports (which are not catalogued in an organized fashion on the Internet but with patience may be discovered; the latest is here) are perfectly adequate methodologically, which is what worries the group because these validly describe what a lousy deal for taxpayers the film credits are. So, the group states that its goal with its own effort is widen the scope on what counts as return on investment, even as it claims it wants a “good, honest study, not skewed in our favor.” But there’s nothing wrong with the existing efforts, so it’s clear that the group is trying exactly to skew the results in hoping to show the credits are less cost ineffective than they really are through changing the definition of return on investment.

And it’s a tossup about whether this is more laughable or more a crass demonstration of chutzpah, but the group actually wants the larger public to fund the effort. Incredibly, an organization that represents those who have been paid, directly or otherwise, hundreds of millions of dollars representing taxpayer money want to engage in crowd sourcing to pay for such a study. I guess once you’re used to sticking hands into people’s pockets for a living, it’s hard not to think they won’t pony it up on their own.

The reason these interests are skittish is that the 2015 session is one where reductions or eliminations of tax credits constitutionally may occur, and as the state continues to endure tight budgetary times, seeing a net loss of $168 million or so as of the last (2012) reported year, an amount that has continued to grow with each report, may tempt policy-makers to stop the bleeding. While next year is an election year, which usually gives legislators feet of clay in pursuing anything that even smells like a tax increase of any kind, that the benefits of this are so concentrated in the hands of a few and to just a few areas of the state while the costs are spread widely actually may give state representatives and senators the courage to buck the few but politically active in support of the many who vote.

In the interim, let’s see what kind of gymnastics get employed by the industry’s representatives to fool us into thinking, despite the overwhelming evidence to the contrary, that allowing them to live off of us benefits us more than them.

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