Film Subsidies, Tax Dollars, and Barbeque Sauce

TicketsCashWhen you go to the movie theater, do you go to watch a movie or to buy BBQ sauce? That sounds like a strange question, but consider the following story.

Warren Theaters in Wichita, Kansas, is now selling Brewer’s Best BBQ Sauce. Why? It may not be coincidence that the sauce company is owned and operated by the Mayor.

Rewind to 2010 when Mayor Brewer championed Warren’s application for incentives suggesting other cities where waiting to jump if Wichita didn’t put its taxpayers on the hook to support Warren’s IMAX theater. Industrial Revenue Bonds were approved, saving Warren from paying $630,000 in sales taxes and an estimated $136,099 a year in property taxes. Three years later the theater is now selling Brewer’s BBQ sauce to movie goers. One is left wondering if the theater plans on expanding its line of grocery items.

Stories like this mark a growing trend of all too cozy relationships between local and state governments. The film industry has jumped on the bandwagon of incentives. There are currently 44 states (plus DC and Puerto Rico) that offer some sort of movie production incentive. Whether it’s $1 million to train film industry employees in North Carolina or $100 million to “pay Hollywood to stay in Hollywood,” filmmakers across the country are benefitting from the “arms race” for movie locations among the states.

If you think that movie production incentives are good for the economy, you might want to consider the overwhelming cost. States offered $1.3 billion in film incentives in 2011.

Nearly all filmmakers are enticed by these credits, even ones making substantial profits. Consider Disney, which took $183 million in tax credits in 2011 despite making $40.9 billion in revenue.

To the extent that government remains in the business of handing out cash to its friends, lobbying the government for special favors is rational, even if it is harmful to taxpayers. So the next time you ruin your alignment on a pothole or are complaining about not having enough teachers in your child’s school, don’t get upset – you can always go watch a taxpayer-subsidized movie and check out the selection of sauces made by your local elected officials.