By: Julia O'Donoghue
Often, Louisiana's film tax credit program benefits individuals and companies that have nothing to do with the movie industry, as explained in this radio piece by Kate Richardson, who works for NPR and WWNO.
For example, the producers of "21 Jump Street" didn't need to use the $12 million Louisiana tax credit they racked up while filming in the state, so they ended up selling some of them to Dow Chemical Corp. Dow then used some of that $12 million to help cover its own tax liability to the state, according to Richardson's reporting.
How did "21 Jump Street" earn $12 million in tax credits? Louisiana returns 30 percent of what was spent on each movie production filmed in the state to the producers in the form of credits. Many producers don't need it because they don't pay taxes in Louisiana. So, they sell the credit to someone else in the state.
Richardson reports that Dow Chemical paid $2.2 million for $2.5 million worth of "21 Jump Street" credits, saving the company about $300,000 in the transaction.
These transfers are part of what makes the film tax credits so unpopular in some circles, though proponents of the program argue they are also what makes the program work. Without the easily transferrable credits, the movie industry wouldn't be interested in filming in Louisiana.
For now, the film tax credit program is growing. In the fiscal year ending June 30, Louisiana spent $258 million on film tax credits, an increase of $107 million over the previous year.
The state is facing financial troubles. Gov. Bobby Jindal just released a plan to close an immediate budget cycle gap of $180 million. For the next fiscal year — which starts July 1 — the financial shortfall is projected to be $1.4 billion in the state.
Originally Published: The Times-Picayune