Hollywood East?

New England’s villages and seacoast, its character and characters, attract producers of movies, television shows, commercials, and other film and video projects. But such work is not just about lovely scenery—it is also about business. Because production costs help determine where such projects are made, five of the six New England states now provide tax credits or other financial incentives to attract producers to film on location. This policy brief discusses whether these incentives attract more production, and whether they are costeffective in creating jobs. It focuses on the use of one major incentive: film tax credits.

The little evidence available suggests that film tax credits do attract film production and create jobs in states that have little or no film industry. However, they also cost states considerable foregone tax revenue. The film production stimulates little additional economic activity in other industries. Consequently, film tax credits do not “pay for themselves” by indirectly generating additional corporate income, sales, and property tax revenues. Evidence on the benefits of film tax credits to states with a large film industry already in place, such as New York, is too scant to enable analysts to draw firm conclusion.

As more evidence becomes available, policy analysts and policymakers should evaluate the cost-effectiveness of film tax credits relative to alternative policies designed to promote job creation and economic growth. They should also take into account the economic effects of measures needed to offset the revenue losses incurred by film tax credits in order to maintain balanced budgets.