Film Tax Credits and the Economic Impact of the Film Industry on Georgia’s Economy

Abstract

Georgia offers the most generous incentives for motion picture and video production in the United States, providing a tax credit of up to 30 percent of qualified expenditures for film and video production within the state. Though the tax credits represent a significant cost to Georgia’s treasury in terms of forgone tax revenue — $800 million in 2018 and over $4 billion total over the past decade — the subsidy is often justified as providing a significant economic impact to the state. The Georgia Department of Economic Development reports that the film industry had a $9.5 billion impact on the state’s economy in 2018. The Motion Picture Association of America reports that the motion picture and television industry is responsible for more than 92,000 jobs in Georgia. However, these estimates rely on incredible multipliers and dubious data. This report examines these commonly reported economic impact estimates and provides alternate estimates of the film industry’s contribution to Georgia’s economy. Though tax credits have incentivized filming in the state, film production remains a rather small part of Georgia’s economy ($3 billion, approximately 0.5 percent). Official government employment statistics indicate that Georgia’s film and video industry employs approximately 16,000 workers. More realistic (though still speculative) multipliers that account for potential additional economic activity throughout the economy indicate that the film industry produces no more than $4.2 billion and 32,000 jobs. However, even these lower estimates should be interpreted with caution due to uncertainties surrounding multipliers. Assuming every film job in Georgia is the result of the tax credits approved, the cost is $64,000 (full-time and part-time) to $119,000 (FTE) in tax credits per job. The $800 million subsidy through tax credits in 2018 is equivalent to 3 percent of Georgia’s state-funded budget or $220 per household.