As President Trump gets to work cleaning up Joe Biden’s failed economy, the last thing the people of Arizona need is to be sending their hard-earned dollars to woke Hollywood. But that’s exactly what’s happening.
Thanks to a law passed in 2022, movie companies that film in Arizona will begin receiving refundable tax credit subsidies this year—up to 15 percent if they spend up to $10 million in production costs, 17.5 percent if they spend between $10 million and $35 million, and 20 percent if they spend over $35 million. Then, to top it all off, these movie companies can get an additional 2.5 percent if they meet other criteria.
But here’s the real kicker. The keyword in all of this is “refundable.” This essentially means that if a movie company qualifies for more credits than they owe in taxes, the State of Arizona sends them a check!
So, how much does this outrageous tax scheme cost the people of Arizona?
Up to $125 million each year!
For that kind of money, there must be at least some kind of return on this investment, right? Nope.
If a company comes to Arizona, films a movie, mentions our state in the credits but decides not to release or distribute the film, it still receives the money.
Yes. You read that right. Arizona taxpayers could be funding Hollywood movies that won’t ever see the light of day. Who came up with this scheme?
This is not only absurd, it’s unconstitutional. That’s why the Goldwater Institute filed a lawsuit against these Hollywood handouts last week.
The Arizona Constitution’s Gift Clause is clear. The state cannot handout subsidies or cash for private purposes unless taxpayers receive a direct benefit. And the Arizona Supreme Court even ruled in 2021 that the government cannot include “anticipated indirect benefits” such as projected sales and tax revenue as part of the consideration with a private party under the Gift Clause in the Arizona Constitution. In other words, Hollywood dazzling our state’s leaders with projected economic development leading to increased tax revenue is an “irrelevant indirect benefit” that can’t be included in the consideration.
While Goldwater litigates the issue, the Arizona legislature needs to get to work as well. Movie production is a multi-billion-dollar industry. They do not need a subsidy. And if that’s not enough of a reason, consider this. Our state has been down this road before.
Years ago, Arizona lawmakers passed an “incentive” program similar to this one that cost us millions of dollars. And guess what happened? It offered no benefits to the people of Arizona and was allowed to expire. On top of that, other states like New York, Louisiana, Georgia, Connecticut, and Massachusetts have enacted Hollywood subsidies. But a recent study showed that despite $10 billion in taxpayer spending, there wasn’t even a statistically significant impact on employment.
It’s time to stop this terrible tax policy in our state. The people of Arizona don’t want to subsidize Hollywood’s woke movies while thousands of liberal California voters are shipped to our state. Arizona’s lawmakers need to do taxpayers a favor and repeal this awful program before the court is forced to shut it down.
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