The Rise and Fall of Tax Breaks

I’ve lived in North Carolina my entire life and have been in some aspect of the entertainment business since the mid 1970’s. North Carolina is a healthy business environment and I have been at this long enough to have survived a number of economic cycles. Sunrise, sunset!

One of the most interesting rise and fall stories of our state’s economy has been the film industry. The area around Wilmington has been the host to the film and television production industry for over 20 years and there have been a number of boom and bust cycles. Major motion pictures like Teenage Mutant Ninja Turtles and television series like Matlock and Dawson’s Creek have called Wilmington home.

I get an online news letter from the NC Film Office and if their newsletter is a true indication of what is going on in our state, then this industry is pretty healthy.

Unfortunately, one reason for the increase in in-state productions is the continued efforts by our state government to favor certain industries with tax breaks. It seems that a production company can accumulate as much as $7.5 million in tax breaks on sales tax, payroll taxes and services taxes. All because they are willing to set up business in NC long enough to make a movie.

I’ve written about similar tax advantages provided when Google decided to locate a server farm in western North Carolina earlier this year. While I understand the importance of bringing jobs to the state (even temporary ones) it is difficult to see how this is so much more important than giving tax breaks to the businesses that have been providing jobs for North Carolinians for years. These are businesses that don’t immediately pick up and move on when some other state (or country) lures them with a better tax incentive. NC has seen major film and television productions move to other states or abroad based solely on who would give the producer the most tax advantages.

Maybe its time to add long term loyalty to the requirements for getting a tax break.

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