Hollywood on the Bayou: An Optimal Tax Approach to Evaluating and Reforming the Louisiana Motion Picture Investor Tax Credit

Author:Amelia Hurt
Position:J.D./D.C.L., 2014, Paul M. Hebert Law Center, Louisiana State University
Pages:581-611
 
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Hollywood on the Bayou: An Optimal Tax Approach
to Evaluating and Reforming the Louisiana Motion
Picture Investor Tax Credit
INTRODUCTION
As Louisiana experiences record-setting growth in the film
industry, awareness of the Louisiana Motion Picture Investor Tax
Credit (MPITC)1 is more widespread than ever.2 In 1992, Louisiana
was the first state to roll out a major film subsidy program.3 Then in
2002, the Louisiana Legislature set out to “encourage development
in Louisiana of a strong capital and infrastructure base for motion
picture production in order to achieve an independent, self-
supporting industry.”4 Since the advent of the Louisiana MPITC,
Louisiana has steadily gained recognition as a new hub for the film
and television industry.5 In 2011, a record 150 productions applied
for the film tax credits.6 For the productions that qualify, the
incentives are significant: a 30% tax credit for spending at least
$300,000 on productions filmed in Louisiana.7
The MPITC has benefited the State of Louisiana considerably.
Between 2008 and 2010, the annual volume of films produced in
Louisiana increased by 175%.8 In 2010, the Louisiana film industry
Copyright 2014, by AMELIA HURT.
1. For the duration of this Comment, the Louisiana Motion Picture Investor
Tax Credit will be referred to as MPITC.
2. The recent record-setting growth in Louisiana film production was largely
expected in part because of the increase in highly publicized films since the
Legislature’s en actment of filmma king tax incentive s. See Mike Scott, Louisiana
Film Industry Passes Billion-Dollar Mark in Record-Setting 2011, THE TIM ES-
PICAYUN E (Jan. 7, 2012, 5:00 AM), http://www.nola.com/movies/index.ssf
/2012/01/louisiana _film_industry_passes.html (noting that the Louisiana film
industry’s growth should come as no “surprise to anybody who’s been paying
attention over the past decade” because of the consistent increase in major studio
films shot in Louisiana).
3. TIM MATHIS, LOUISIANA FILM TAX CREDITS: COSTLY GIVEAWAY TO
HOLLYWOOD, LOUISIANA BUDGET PROJECT (Aug. 2012), http://www.labudget.org
/lbp/wp-content/uploads/2012/08/LBP-Report.Louisiana-Film-Tax-Credits.pdf.
4. LA. REV. STAT. ANN. § 47:6007 (2009) (amended 2013).
5. Richard A. Webster, Year in Review: Hollywood South Sets New Records,
NEW ORLEANS CITY BUS. (Dec. 30, 2011, 2:51 PM), http://neworleans
citybusiness.com/blog/2011/12/30/year-in-review-hollywood-south-sets-new-
records.
6. Id.
7. § 47:6007(C)(1)(c)(i).
8. CHERYL LOUISE BAXTER, FIS CAL & ECONOMIC IMPACT ANALYSIS OF
LOUISIANAS ENTERTAINMENT INCENTIVES (2011), available at http://louisiana
entertainment.gov/docs/main/louisiana_entertainment_2011_economic_impact_an
alysis.pdf.
582 LOUISIANA LAW REVIEW [Vol. 74
became a billion-dollar player in the nationwide film market.9
Louisiana is now ranked third in the country in film production
activity, and the industry supports thousands of jobs in Louisiana
that previously did not exist.10 Additionally, motion picture
production companies and their employees spend money that would
not otherwise benefit Louisiana residents and businesses.11
Louisianans also enjoy the notoriety and excitement of living in
“Hollywood South.”12 Some of the most highly publicized films
released in 2012 took advantage of the MPITC. The popular
Twilight Saga: Breaking Dawn, Parts I and II directly contributed
$189.3 million in economic activity in Louisiana while earning
$33.2 million in tax credits.13 This translates to approximately $5.70
in direct economic activity generated for every $1 of state tax credits
awarded.14 Meanwhile, Abraham Lincoln: Vampire Hunter result ed
in $61.5 million in contributed economic activity and earned $19.3
million in tax credits,15 which translates to approximately $3.19 in
direct economic activity for every $1 in state tax credits awarded to
the production.16
Unfortunately, these results do not tell the whole story. An
economic analysis by BaxStarr Consulting Group showed that
motion picture production generated $27 million in state tax revenue
in 2010 while the State certified $196.8 million in tax credits.17 This
figure indicates that the State is paying roughly $7.29 per every $1 it
collects as a result of the MPITC.18 The State of Louisiana is losing
9. Scott, supra note 2.
10. Adriana Lopez, A New Economic Report Surfaces, but It Could Have a
Hollywood South Ending, FORBES (Aug. 10, 2012, 12:58 PM), http://www.forbes
.com/sites/adrianalopez/2012/08/10/a-new-economic-report-surfaces-but-it-could-
have-a-hollywo od-south-ending.
11. John Grand, Mo tion Picture Tax Incentives: Theres No Business Like
Show Business, 39 STATE TAX NOTES 10 (2006), available at http://taxprof
.typepad.com/taxprof_blog/files/2006-2997-1.pdf.
12. Matthew J. Bailey, Hollywood South: Why Film Credits Are Good for
Louisiana, 48 STATE TAX NOTES 715 (2008), available at http://thelouisiana
wavestudio.com/pdfs/Tax_Anal yst_LA_Film_Credits.pdf.
13. Michelle Millhollon, Panel to Review Tax Incentives, THE ADVOCATE
(July 1, 2012) (on file with the Louisiana Law Review). These economic
contributions i nclude payroll, purchases, and other economic activity in Lo uisiana.
1 4. $189.3 million/$33.2 million = $5.70 generated for every $1 of state
investment.
15. Millhollon, supra note 13.
1 6. $61.5 million/$19.3 million = $3.19 generated for every $1 state
investment.
17. BAXTER, supra note 8.
18. $196.8 million/$27 million = $7.29. See also Daryl G. Pupera, Louisiana
Department of Economic Development and Louisiana Department of Revenue
Motion Picture Investor Tax Credit Program, Performance Audit, LA. LEGIS.

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