Former President Jimmy Carter died on Sunday at 100 years old. In the century he spent on earth, his single terms as U.S. president and governor of Georgia somehow pale in comparison to an extensive post-presidency spent building houses for the needy and winning a Nobel Peace Prize.
But while there is much to consider about Carter’s legacy, one of the lesser-known items on his résumé is the hand he played in today’s lucrative state tax credits for film and TV production.
In 1971, director John Boorman filmed Deliverance, largely in northeast Georgia. The production was a novelty in the rural area, and Ed Spivia, a former radio journalist working for the state government, visited the set to write it up for the tourism board. During his visit, Spivia formed what would become a lifelong friendship with the film’s star, Burt Reynolds, but he also saw firsthand what a boon it was to the local economy: Taking place in the backwoods, the film cast a number of locals as extras, and the sudden influx of cast and crew generated considerable revenue for local hotels and restaurants.
This gave Spivia an idea. “Georgia was having a downtime, and I thought more films would be a good way to get more money spent on Georgia,” he later told Atlanta Magazine.
Back in Atlanta, he pitched his idea to Carter, who had been sworn in as governor that year. Convinced, Carter established the Georgia Film Commission—credited as the first such office in the country—and named Spivia its first commissioner.
In his new role, Spivia acted as an ambassador to the film industry, coaxing film and TV productions to the state. In his first decade on the job, dozens of projects came to the state, including Reynolds’ films The Longest Yard, Gator, and Smokey and the Bandit.
It’s worth noting that at this time, Spivia’s role largely consisted of acting as a liaison who could streamline certain requests and cut through red tape. For example, when Reynolds needed to be able to film The Longest Yard in an actual prison, “Spivia helped secure access to the state prison in Reidsville,” according to his 2019 obituary in The Atlanta Journal-Constitution.
But state film and TV offices serve a much different purpose today, often doling out millions or billions of dollars in tax incentives each year to convince studios to film in their state instead of somewhere else.
Georgia passed a law in 2005 to provide income tax credits for productions that spend at least $500,000 in the state; a 2008 amendment put the credit at 20 percent, plus an additional 10 percent “if the qualified production activity includes a qualified Georgia promotion”—for example, a “Made in Georgia” logo in the end credits.
“That small logo tacked on the end credits can save productions hundreds of thousands if not millions of dollars,” CNBC’s Darren Geeter wrote in 2021.
The credits seemingly work: Numerous shows and movies film in the state every year, including big-budget superhero films and TV genre fare like Netflix’s Stranger Things, supporting tens of thousands of jobs and billions of dollars in annual production revenue—leading Atlanta to be called the “Hollywood of the South.”
But it’s far from clear that the credits are worth the cost.
“The credit has more than doubled since 2013, reaching $961 million in tax year 2019,” according to a 2022 report from the Georgia Department of Audits and Accounts. “It remains the state’s largest income tax credit and the largest film incentive in the country.”
Not only that, but the auditors found that most production companies sell the credits rather than use them. “Approximately 97% of credits generated in tax year 2016 were transferred to another taxpayer (e.g., sold), while less than 1% of credits were used by the production companies against their own income tax liability or their employee income tax withholding,” the report noted. “The increased production activity in Georgia does not increase income taxes owed by companies because income taxes owed are based on sales (or other receipts), not production costs.”
Besides, the report added, the additional income tax revenue doesn’t necessarily mean that Georgians are the ones who benefit: “Most states incentivized hiring residents over nonresidents, but Georgia did not. As such, nonresidents and out-of-state vendors can provide services within the state, and the expenditures qualify for the credit.”
“Consistent with studies of other state film tax incentives programs, the State of Georgia loses money,” according to a 2023 audit conducted by Georgia State University. “We calculate a state fiscal [return on investment] of 0.19 for FY 2024, or a loss of 81 percent, using the estimates generated from the representative year of 2022 and using credits generated of $1.35 billion.” The auditors also calculated a “cost of $160,009 for every net job.”
To be sure, Jimmy Carter does not deserve the blame for a counterproductive tax incentive program implemented three decades after he left office, but it’s part of his legacy nonetheless. It also serves as a notable indicator of how such programs have come to function over time—from encouraging film and TV studios and offering assistance to doling out tax credits that the studios just sell for cash rather than use.
The post Jimmy Carter’s Gift to Hollywood Was No Gift to Georgia Taxpayers appeared first on Reason.com.
