FILE - Film shoot

The left-leaning Policy Matters Ohio is encouraging the state Senate to support the House’s effort to remove motion picture tax credits from the budget.

The program, which provides subsidies for film projects via tax credits, is catching flack from both sides of the aisle. The Buckeye Institute, a right-leaning non-profit, has also come out against continuing the program.

“Tax breaks drain state resources needed for schools, safe streets, clean water and other basic public services,” Wendy Patton, senior project director for Policy Matters Ohio, wrote in the policy brief.

“Ohio, like 33 states including the District of Columbia, offers a motion picture tax credit in an expensive competition for a footloose sector with global opportunities,” the brief read. “Following the lead of neighbors Michigan and West Virginia, Ohio’s House of Representatives axed it in the budget bill for 2020-21. The Senate should support the elimination of this tax break.”

According to the Policy Matters Ohio brief, Ohio’s budget currently sets aside $40 million for potential subsidies for the film industry every year. The money funds about 30 percent of all film activities in the state. The credit, which was first created in 2009, can be applied to the commercial activity tax, the income tax or financial institutions tax.

The brief states that these credits often flow to entities that aren’t even related to the film industry and that the program has evidently failed. Despite spending $32 million in tax credits between 2011 and 2014, those credits generated only $22 million.

In an email, Patton told the Center Square that the state competition for film production is destructive, as some states spend hundreds of millions of dollars to dominate the industry. Currently, Ohio has a drug epidemic, an infant mortality rate higher than some developing countries and many other issues, which she said should take priority over taxpayers funding film. She suggested that the state fund K-12 education, higher education, clean water programs, infrastructure and programs to address the drug problem.

“We should invest to improve and solve these problems that affect all,” Patton said.

Although right-leaning groups tend to agree with ending the subsidy, what they would do next differs.

In an email to the Center Square, Buckeye Institute Research Fellow Greg Lawson said the film tax credit was not a good policy and compared all of the holes in the tax code to swiss cheese.

“The right tax policy is to have low rates and broad bases that raise only the revenue needed for government to perform its core functions,” Lawson said. “This is why overall tax reform is needed in Ohio. Unfortunately, creating holes in the tax code that makes it resemble swiss cheese is not good. It would be better to eliminate the income tax and focus on the sales tax than continue giving breaks to various industries.”

The program, Lawson said, does not promote growth and is inherently unfair because it favors certain groups over others. He also said that once the government provides funds for one group, it tends to keep giving away money to try to maintain businesses.

Despite this push, there is also pending legislation to increase the tax subsidy by $10 million annually.

Reporter

Tyler Arnold reports on Virginia, Ohio and Michigan for The Center Square. He previously worked for the Cause of Action Institute and has been published in Business Insider, USA TODAY College, National Review Online and the Washington Free Beacon.