State-Sponsored Study Finds New York’s $700 Million Film Credit Is Failing

The Statue of Liberty stands in the foreground as Lower Manhattan is viewed at dusk in New York City on Sep. 8, 2016. Drew Angerer/Getty Images

A recent audit commissioned by New York’s Department of Taxation and Finance indicates the state’s $700 million-a-year tax credit for film and television productions is failing to give taxpayers a return on their investment.

PFM Group Consulting was contracted to conduct an independent and comprehensive analysis of each of New York’s tax credits, deductions, and incentives, as required by state law. This included the Empire State Film Production Tax Credit program, which was established in 2004.

The ensuing report, released in December 2023, concluded that the Film Tax Credit program “does not provide a positive return to the state in terms of direct state taxes revenues.” Instead, it garnered a mere $0.15 in direct tax revenue and $0.31 in combined state tax revenue per dollar invested.

Although the incentive program has not been lucrative for taxpayers, many entertainment giants have reaped the benefits. Amazon has claimed more than $108 million in state tax credits since 2019, per The New York Times. Regarding projects, NBC Universal’s sitcom, “Unbreakable Kimmy Schmidt,” netted $14 million, while the “John Wick” franchise, which starred actor Keanu Reeves, reportedly received $15.7 million.

According to the December 2023 report, many of the film and television productions that took advantage of the taxpayer-funded tax credit would likely have chosen New York regardless of the incentive. The audit indicates this is due to the state’s “prominence in U.S. culture.”

One such example is NBC’s “Saturday Night Live,” which is well-known for its slogan: “Live from New York, it’s Saturday Night!”

Despite having always been broadcast live from Studio 8H at Rockefeller Center in the heart of midtown Manhattan, “SNL” received more than $20 million in credits in 2023 alone, per La Voce di New York, while “Blue Bloods,” a television show centered on New York City law enforcement, received a similar amount.

New York Film Tax Credit

New York has funneled nearly $7 billion in taxpayer dollars into the program since its inception two decades ago, per Empire Center.

The Film Tax Credit was designed to incentivize film and television projects in New York state. It also aims to lure productions away from competing states like New Jersey and Georgia, which boast similar film tax credits.

The incentive program started with an annual budget of $25 million, allowing producers to claim 10 percent of qualified expenses, per the Empire Center. It has since ballooned to $700 million after getting a $280 million subsidy boost last year.

Productions are now eligible for a tax credit of 30 percent of qualified expenses, and the program has been extended to 2034.

Film Tax Credit Comes Under Fire

The 2023 report raised doubts about whether film tax credits significantly impact employment and film production within the state.

“A 2018 study on California’s Film Production Tax Credit 2.0 found no link between the program and film production within the state, nor did it find that other states’ spending in similar programs led to a decrease in filming within California,” the report concluded.

The audit notes that many jobs in the film and television industry tend to be high-paying, “which creates enduring value.”

However, the report states that “it is likely that the production credit will never ‘go away’ in the sense of leaving behind a stable, job growth industry absent the credit. In this sense, the credit is more an ongoing subsidy than a point-in-time incentive.”

Michael Kink, executive director of the Strong Economy for All Coalition, told Spectrum News 1: “There is no proof in this report that any of the programs we have actually created jobs.

“We need to move money away from corporate subsidies and into investing in things that benefit communities: early education, public health, housing,” he continued.

A handful of New York lawmakers agree. The Film Tax Credit has garnered significant pushback on both sides of the aisle, including from Democratic state Sens. Liz Krueger, James Skoufis, and Sean Ryan.

“There are some of us, myself included, that believe that the Film Tax Credit and the associated entertainment tax credits are such a bad deal that they ought to be repealed,” Mr. Skoufis said in a statement. “But the politics is the politics in the state Legislature, and that continues to remain an uphill climb.”

In response to public criticisms of the state’s film tax credit, Justin Henry, deputy communications director for New York Gov. Kathy Hochul—who led the charge in increasing the program’s incentives last year—said the 2023 audit is now being reviewed.

“New York’s tax credits and incentive programs are critical to growing the state’s economy, boosting innovation, and creating good jobs, which is why the Legislature approved them in the first place,“ Mr. Henry said. ”Governor Hochul will continue working with members to improve the programs to maximize benefits for New Yorkers.”