Stacy addressed the ridiculousness of Jim Geraghty’s recent NRO piece on film tax credits and “Sarah Palin’s Alaska”. Governor Palin also released a statement to the Daily Caller and wrote a Facebook post setting the record straight on the tax credit. Today, Dana Loesch has a great piece up at Big Journalism discussing the nontroversy of “‘Sarah Palin’s Alaska’ Tax Credit-gate”. Loesch does a great job of clarifying the difference between a tax subsidy, as Jim Geraghty wrongly defined the incentive utilized by the production company that produced Sarah Palin’s Alaska , and a film tax credit. She also discusses the 10th amendment and economic benefits of such legislation:
While we at Big Journalism spend most of our energy correcting bias and falsehoods originating from the left, every now and then we must take a moment to gently correct things that go off track with our friends on the right. This is one such case.
Jim Geraghty started a brouhaha yesterday by criticizing how the makers of “Sarah Palin’s Alaska” received $1.2 million in tax credits by filming in the state — and that Palin signed the 2008 law which made it possible. Because she’s now apparently omnipotent, able to see into the future and plan for it by signing into law a complex program with numerous in-house checks and balances. Geraghty questioned Palin’s conservative credentials.
… but it looks problematic for a crusader for small government to end up collecting a seven-figure paycheck from an endeavor that received a seven-figure subsidy, all set up by a program she signed into law.
What’s problematic is to define the tax credit in this issue as a “subsidy.”
Tax credits are offered as an incentive to do business in a particular area, city, or state as a way to attract business and commerce into said area. These tax credits are usually offered as a percentage of total money spent and the credits can be sold at a discount to businesses looking to alleviate their tax load. The exchange creates a cashflow that helps offset the costs of doing that particular business in that area; in this case filming in Alaska is very expensive. A net gain of dollars flows into those local communities and the credits establish a way for a particular locality to compete with other cities or states for business; over the long term it can they help establish a broader tax base by increasing the number of professionals drawn to the area.
The bottom line is that the issue of film tax credits is grossly misunderstood. It’s a process open to anyone who can come up with a solid business plan to get them. Arguments against it include complaints about making states compete against each other; well, aren’t we conservatives? Don’t we like competition? Don’t we all realize that such widespread competition lowers the taxes across the board? Is that not a good thing, if we are to discuss this within the context of financial conservatism?
If limited government is to mean something, it means there must be some areas of economic activity that government does not seek to steer, influence, promote, regulate, or restrict.
Allowing companies more control over their dollars (by way of reselling credits, et al.) is less government intervention. Demanding more of their dollars is absolutely steering, influencing, regulating, and restricting the free market, and it certainly does promote the value of filming in one state over another.
Read the whole piece here. It is excellent.