Don’t add TV loophole to film subsidy cap!

Last year, we at the Rio Grande Foundation proposed capping annual outlays for New Mexico’s film industry subsidies (25% on the dollar is given to the industry) at $30 million annually. The ultimate agreement was to cap the subsidy at $50 million annually. This is a reasonable compromise, but the fact is that the film industry subsidies represent net spending (they are not a credit, thus representing foregone taxes) and are bad economic policy. Long-term, the subsidies should be phased out towards total elimination.

Unfortunately, liberals in the Legislature are hoping to eliminate the cap on TV shows, thus giving unlimited subsidies to the filming of television shows in New Mexico. SB 168 is terrible legislation. Rep. Kintigh’s HB 117 would move our state in the right direction by phasing out the subsidy at a rate of one percentage point annually.

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5 Replies to “Don’t add TV loophole to film subsidy cap!”

  1. I am not a liberal. Far from it. I mean, REALLY far from it. And I support much of what the RGF proposes. Not this time, though, and not when you proposed the cap in the first place. If a movie producer dollar comes into the state, the roll-over effect gains New Mexico much more than than the 25% rebate returns to the producer. And the real kicker here is that the rebate is paid AFTER the roll-over effect has taken place, ergo, the movie producer dollar has generated the 25% all on its own. So I argue we return to the no-limit rebate and back to bringing in millions into NM. Of course if NM were a Right To Work state there would easily be even more production here.

    1. I disagree with you, Larry, about the economic impact of the film subsidy, but if the unions were taken out of the equation I don’t think you’d have the same political dynamic relating to the film subsidy.

  2. If giving an industry a 25% rebate on their expenses in NM, why not offer the same rebate to every industry in the country? Just think of the money we could bring to the state! The problem is, the rebate is coming out of the pocket of every taxpayer and our pockets are not that deep and never will be. The rebate is not matched by tax receipts. This is not even a zero sum situation.

  3. Targeted tax incentives are a frequently used economic development policy tool. There is, however, little evidence that targeted tax incentives produce benefits that exceed their economic costs.

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