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Do Hollywood tax credits pay off?

The Hollywood sign.
The Hollywood sign.
David McNew/Getty Images

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It’s right there in the name – when we say Hollywood, we don’t mean the collection of t-shirt shops and tourist attractions just north of Sunset Blvd, we’re talking about the glamour and power of the film industry. To keep its namesake, and promote economic activity, the state of California offers $100 million dollars a year in tax credits for film productions.

That hasn’t stopped some entertainment jobs from moving out of state as Massachusetts, New York and Michigan try to get in on the action. Another round of credits waits on Governor Jerry Brown’s desk, but some Sacramento analysts say the state would be better off if the credits expired.

According to industry groups, taxpayers spend only $10,000 per year per job created, which they say is more than made up for in income tax revenue and buying food, gas and housing in California. But state analysts believe that cost is much, much higher, and has done little to stop productions from leaving town.

Where do you land? Is the film industry a net gain or loss for California? And even if it costs the state more than it takes in to keep productions and talent here, is it worth your tax dollars to keep Hollywood in the Golden State?


Paul Audley, president of Film L.A., Inc.

Will Freeland, economist with The Tax Foundation, a non-profit, non-partisan tax research organization based in Washington, D.C.