A little short on time this morning due to an impending East Coast conference call. So, let’s just continue yesterday’s discussion with a little homework assignment. The film industry tax credits are getting a lot of attention in the last twelve months. It was the darling of soon to be former Governor Richardson (and short list candidate for MPAA Chairman job). Of course, they’re only part of the story – albeit, a ridiculously large part.
Take some time to review the RECOMMENDATIONS OF THE BLUE RIBBON TAX REFORM COMMISSION AND REVIEW OF CREDITS AND EXEMPTIONS ADOPTED SINCE 2003 and presented to the Legislative Finance Committee on August 13, 2009. It’s got some interesting details. Of course, I’m partial to this observation:
Incentives targeted at particular industries raise concerns of adequacy – due to the potential drain on state funds — equity – the failure to treatment all businesses equally – simplicity – because businesses must jump through so many hoops to qualify – and accountability – because the Tax Department is in no way capable of insuring that funds are being used for the intended purposes. An argument can also be made that these incentives fail the efficiency principle because they substitute political decisions about the allocation of resources for decisions made in the marketplace. Offsetting these is the hope that incentives can be carefully targeted to stimulate activity that would not otherwise occur in the state, thus generating lasting long-term growth with its potential to increase private and public economic resources in the state.
But hey, that’s just me.