If you plan to watch movies with your family this holiday season, you expect to pay for tickets, subscriptions, or rental fees. However, you are probably unaware that some of your tax dollars might have funded the production of the films.

Currently, 37 states offer so-called film incentives, such as tax credits, grants, and subsidies, to film-production companies. Unfortunately, these incentives do not generate the economic benefits some government officials claim. Instead, they divert economic activity from one sector to another, benefiting politicians, bureaucrats, and the recipients of the handouts at the expense of everyone else.  

In 2005, North Carolina implemented a tax credit for film production, which transitioned to a grant in 2015. Currently, the state offers motion-picture production companies grants valued up to $7 million for movies and $15 million for television series.

Earlier this year, the North Carolina Department of Commerce (NC Commerce) announced that six film productions were projected to create 8,500 jobs. Gov. Roy Cooper credited the state’s Film and Entertainment Grants for the supposed success; however, burgeoning research and the data tell a different story.

Prior research

In 2013, the North Carolina General Assembly’s Fiscal Research Division produced a memo that concluded that, from 2007 to 2011, film incentives created fewer than 200 jobs in North Carolina.

In 2016, a nationwide study found that motion-picture incentive programs do not impact a state’s economic growth. Furthermore, another national study published in 2018 determined that movie production incentives do not positively impact state economies.

In 2019, research out of Western Carolina University’s Center for the Study of Free Enterprise found that “there is little evidence to indicate North Carolina’s incentives generate a positive impact for the state that justifies their expense.” 

In 2020, researchers performed a cost-benefit analysis across states that revealed movie incentive programs negatively impact state revenue. For example, the study estimated that for every dollar North Carolina provides film-production companies, only $0.22 is generated for the state.

Author’s analysis

According to reports from the North Carolina Department of Revenue (NCDOR), film incentives have created more than 150,000 jobs since 2005. This estimate is, at best, disingenuous. For example, the NCDOR reported 17,075 jobs for 2023. However, according to the US Bureau of Labor Statistics, via NC Commerce’s website, only 4,613 people were actually employed in the motion picture and video industries in 2023. This discrepancy likely suggests that some workers, despite being one person, had multiple short-term jobs and were counted more than once, and some of the jobs were filled by workers from out of state. 

The table below depicts North Carolina’s jobs in the motion picture and video industries and the cost of film incentives provided annually from 1990 to 2023. The data are corrected for population growth and adjusted for inflation.

The period before film incentives, 1990 to 2004, consistently generated more jobs than after the credits and grants were offered. Specifically, from 1990 to 2004, the annual number of jobs per 10,000 people averaged 20.8% higher than from 2005 to 2023. Moreover, in the two years the state provided the most corporate welfare to film-production companies, 2012 and 2023, job numbers were among the most dismal in the data.

Policy recommendation

As the research and data demonstrate, the claim that film incentives are effective public policies for generating jobs and economic growth is fiction. Consequently, policymakers should heed the advice of my John Locke Foundation colleague, Jon Sanders, who has advocated for the elimination of film incentives for more than a decade. Rather than providing handouts to favored industries and discriminating against the rest, the state should focus on fostering a low-tax environment for all businesses.