Why Is California Giving Corporate Welfare To Hollywood Studios?



A corporate practice normally under fire from celebrity intelligentsia is in full effect for Hollywood studios.

Notice came from the California Film Commission that the state has elected to grant $100 million in film-tax credits. The announced allocation will be portioned out to twenty two movie productions, involving some major studios and large-budget projects.


One unnamed film is from Paramount Pictures, with a stated budget of $100 million, and another is the Warner Brothers Studio remake of the classic “A Star Is Born”, set to star Bradley Cooper, and Lady Gaga. Other companies listed among those receiving millions of dollars in tax credits were Lions Gate Entertainment, and Amazon Studios.

If the idea of Democrat-favoring Hollywood being on the receiving end of what they normally criticize as “corporate welfare” sounds contradictory, you are correct. Much of the fiscal construct in the studio system defies conventional economics. Just as often the actions of the players in Hollywood are in direct opposition to the words they spew in their political discourse.

For decades Hollywood — and California in general — has seen productions, jobs, and entire sectors of the entertainment industry fleeing the area. Canada has been particularly aggressive, with so many movies and TV shows now produced across the border it is regarded as Hollywood North. New Orleans has also used tax incentives to draw enough productions it now hosts its own entertainment industry.

The state of Georgia has also been aggressive in this fashion. “The Walking Dead” films there, as one boutique production. Recently Britain’s Pinewood Studios installed a major production facility with sound stages. This was where Marvel’s “Ant Man” was filmed. Georgia has also created a burgeoning animation industry.


These locales have benefitted from a Hollywood paradox. Frequently celebrities and other assorted luminaries will vocally support their favored liberal politicians in targeting the wealthy in this country for higher taxes. It has been a tired cliché to see them preen for the cameras declaring their willingness to pay higher rates.

Yet look at their actions. As stars, producers, and studio heads backed President Obama faithfully during his calls for higher taxes, their industry has been fleeing California at an alarming rate. The reason? They seek out those areas offering tax breaks for productions. So while demonizing the rich for “not paying their fair share” these same economic blowhards flock to tax havens. The hypocrisy reaches comical levels.

Jeffrey Katzenberg lends his initial to the studio Dreamworks SKG. He was also a vociferous Obama supporter. He was a bundler for both of the Presidential campaigns, including the reelection bid against Mitt Romney. One common narrative in that competition was how Romney was prone to shipping American jobs overseas. “Outsourcing” became a pejorative.

Following his reelection success the President showed his loyalty by visiting Dreamworks Animation studios. He gave a speech and toured the facility, heaping praise on the company and the health of the animation film sector. Weeks later hundreds of Dreamworks employees were laid off, and another animation wing in Los Angeles was shut down completely. Dreamworks was moving most of its upcoming animation work to Canadian studios, as well as others in Asia. Cheaper labor, you see.


Mogul Harvey Weinstein is another Hollywood power broker who backed Obama financially. He also comes off looking rather hypocritical as he continually pleads with the state Governor, Jerry Brown, to provide more tax breaks for film productions. Also in on the lobbying effort are various unions in the state. Union leaders are frequently the first mouthpieces to decry “corporate welfare”. Yet there they are in the state capital, actually pushing politicians to provide the very benefits they normally deride.

The actions of the studios are those of most businesses looking for the best opportunity and trying to influence politicians on their behalf. They would just prefer you ignore their desire for conservative economics and instead pay attention to the lip service they give to the application of liberal tax policy — for others.


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