A news service for the people of Michigan from the Mackinac Center for Public Policy

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Michigan Taxpayers Already Paid for 'Oz'

Film costs state taxpayers almost $9 each

The Disney blockbuster, "Oz: The Great and Powerful," opens today. The film cost the studio about $200 million to make, but Michigan taxpayers chipped in substantially for the production through the state’s generous film subsidy program.

In fact, the state paid more per taxpayer than the average price of a movie ticket — Michigan residents should be seeing the film for free.

Michigan has 4.5 million individual taxpayers, and the state gave the film studio $39.7 million to shoot the movie in Pontiac. That works out to a subsidy of $8.82 per taxpayer while average ticket prices nationwide are $7.96.

The subsidy was granted in 2010 when the program refunded up to 42 percent of Michigan expenses to film makers — essentially a check from the treasury to Hollywood studios. The program expired, but the Legislature, dominated by Republicans, overwhelmingly decided to keep it around.

Despite "conservatives" who claim to not like the government picking winners and losers and "liberals" who say government shouldn't benefit large corporations and big business, Michigan politicians continue to spend taxpayer money on the program. The current state budget set aside $50 million for film tax credits and political leaders on both sides of the aisle are pushing for more.

In the past few years, the program has handed out tens of millions of taxpayer dollars for films like: "A Very Harold and Kumar Christmas," "Iron Man 3," "Transformers 3" and "Real Steel,” as well as the classic “House of the Rising Sun” (which went straight to DVD and was subsidized more than four times what the film made in sales).

The program has dished out money to a veritable Who’s Who of box office bombs: “The Genesis Code,” “Vanishing on 7th Street,” “Trust,” “Conviction,” “Alleged” and “Kill the Irishman” — all of which made almost no money in theaters or sales.

As I wrote in a recent blog at the Mackinac Center's website, for 2010-11, "the Michigan Senate Fiscal Agency found that even among the most optimistic of assumptions, the film program brought the state only $0.11 per dollar spent — costing Michigan taxpayers $125 million and returning $13.5 million in 2010-11. According to the Center for Budget Priorities, economic analysis of film subsidy and tax credit programs across the county have been almost unanimous — the programs are not near worth the cost."

Film subsidies are an expensive way for state lawmakers to look like they are "doing something" and they have the added lure of bringing Hollywood stars to the state. But almost no economists or researchers who have looked at film subsidy programs have found an economic benefit, making this a policy flop.

(Editor's note: This story has been edited since its original posting. The focus of the story has not been altered.)

Meet James Hohman, Assistant Director of Fiscal Policy at the Mackinac Center. James discusses his latest project, an analysis of Proposal 1, the proposal on personal property tax reform that will appear on the August 5th ballot. Read more about Proposal 1 here: http://www.mackinac.org/20246


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