Business Tax, Governor Murphy
RELEASE: Good Headlines, But Bad Policy: The Story of NJ’s Film Tax Credits
December 9, 2024
Dr. Charles Steindel authors report for GSI questioning economic value of tax credits
For Immediate Release
Contact: Audrey Lane
Morristown, December 9, 2024 – The Garden State Initiative today released a report authored by Dr. Charles Steindel titled “New Jersey’s Film Tax Subsidy: Is it Worth it?”, arguing that the state’s much-ballyhooed film tax credit subsidies will never generate the economic growth sufficient to cover their cost.
Dr. Steindel, who most recently served as a Resident Scholar of the Anisfield School of Business at Ramapo College and previously as Chief Economist of the New Jersey Department of the Treasury, and Senior Vice President at the Federal Reserve Bank of New York, said there is zero evidence in favor of continuing, much less expanding, New Jersey’s film and video production credit program.
“Under the Murphy Administration, New Jersey has greatly expanded subsidies for film and video production, yet scant evidence exists that these subsidies generate any growth at all, let alone enough to cover their cost,” said Dr. Steindel. “Pledging annual credits equal, or close to 1% of the state budget to this program is ill-advised, particularly since this industry accounts for a fraction of New Jersey’s economy.”
The report challenges support for the film industry that is based on analysis heavy on seemingly impressive numbers, often claiming substantial “multiplier effects.” Unmentioned is the fact that the annual value of economic activity in New Jersey is around $800 billion, while the 2023 total of wages earned by workers in film and video production in the state was little more than $300 million.
New Jersey, like many other states, offers transferable corporate tax credits to the film industry starting with 30% of production costs outside of New York City and 35% elsewhere in the state up to an annual limit of $430 million a year allocated through the state’s Economic Development Authority (EDA). A similar program is under fire in New York State, where a Democratic State Senator labeled it “a bust”, further arguing that many of the production companies who took advantage of the tax credit would have filmed in New York regardless.
This report aligns with similar research in other states confirming the limited value in film tax credits for New Jersey taxpayers,” said GSI President Audrey Lane. “Given New Jersey’s current economic and fiscal challenges, the decision to expand these Hollywood tax credits is perplexing.”
Former NJ State Treasurer Andrew Sidamon-Eristoff added: “Thank you, Dr. Steindel and GSI, for once again documenting the unvarnished, if unwelcome truth: film and production tax credits are great politics but lousy economic development policy. New Jersey’s taxpayers deserve better.”