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Akron Law Review

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State tax incentives for the film industry will remain part of the economic development program of many states despite recent troubled programs and calls by public advocacy groups to reign in or eliminate such programs. Some states have reduced or eliminated their film industry incentive programs, but accountability remains an issue for the forty-five percent of states with film incentive programs that do not require audit verification or substantiation of the benefits gained from the programs. The U.S. film industry continues to grow and there is opportunity for states with well-developed programs and rigorous compliance standards to be successful—providing net economic growth from the granting of tax incentives to retain or attract film production. To truly account for economic growth from these programs, states must adopt standardized methods to measure the expenditures of film production companies and jobs created by their activities. If all states with these programs adopt these standards, state legislatures and the public will be able to more easily determine the success of such programs. These standards will also help create more reliable and accurate data to measure the success of a program. Linking the funding of these programs to a state’s budget process and limiting the appropriation of the funds for the programs to an annual basis will also help in managing the amount of incentives granted. Finally, states must be proactive in enforcing the covenants and promises made by film production companies and be willing to institute legal action to retrieve lost funds due to the failure to meet such covenants. For these proposals to be truly effective, all states granting tax incentives for the film industry must be willing to accept the standardized definitions and measurements. If only a few states agree to such provisions, they will be at a disadvantage as compared to other states who continue the “race to the bottom” to attract film production to their state. Adoption of these proposals will help prevent future “fleecing” of state economies.



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