A War With Canada

Captain America sold out to the English and not even the X-Men can save us from the Canadians. What should our government do about runaway film production?

With unemployment stubbornly standing at 9%, the government should focus on the film industry and the jobs it creates. A recession-proof industry, the problem is not whether there will be film jobs in a given year, it is whether the jobs will benefit Americans or be shipped abroad. As my PolicyMic colleague Jordan Wolf argues in his article, too many potential jobs are being lost because film companies simply do not have enough incentive to stay in America. Laissez- faire has failed U.S. film workers, and it is time for a federal effort.

Runaway Production – The Brotherhood of Evil Mutants

Runaway production is when production of a movie is outsourced, but the movie is intended for release in the United States. Some of the most famous examples of this concept are “spaghetti westerns,” or classic westerns like The Good, the Bad and the Ugly set in the U.S., but filmed in Italy for cost purposes. Other, more modern examples include The Matrix (Australia), the entire X-Men Trilogy (Canada), and even Brokeback Mountain (Canada again; recognize those mountains Wyoming natives? I didn't think so). Captain America is the most American superhero you could possibly imagine, but that did not stop him from lugging his shield to London, where the entire movie was filmed thanks to a 25% tax incentive. If Hollywood is the hero of American film-related jobs, then who is the villain?

Causes of Runaway Production – “Taxneto”

Tax incentives are the most obvious culprit (the Magneto if you will), but vertical integration (the Juggernaut) and exchange rates (Pyro?) are also noteworthy. A global company is loyal to its shareholders, not its home country; if it costs Columbia (whose film interests are owned by Japanese Sony USA) less to film in Australia or Thailand, then it will definitely film there. People used to point to exchange rates as a major cause, but given their volatile nature, filmmakers will rarely weigh them heavily in their location decision (like Pyro, they will never lead the Evil Mutants, but they can certainly make things difficult for our local heroes). So taxes remain the target.

Canada started giving tax incentives in 1998 and saw a 36% increase in employment from foreign location production by 1999, and a 55% increase by 2000. The U.S. enacted film incentives in 2002 which slowed the outflow, but recent state activity has dulled the effect.   

Inter-State Competition – Wolverine Fighting Cyclops

After successful incentive programs in California and New York, over 40 other states rushed to incentivize. But they overdid it. For example, in an effort to stay competitive, New Mexico now loses about $16,000 per film job it creates.

Which is great for Thor (largely filmed in N.M.), but completely unacceptable for New Mexico. As states continue to compete, the incentives become more unsustainable and the overall economic benefit for the U.S. is lowered. Which means Canada wins, and no one wants that.

What Would Dr. Xavier Do?

It is so obvious, it almost hurts to write this, but if the incentive program has more cost than benefit, then scrap it! Some may say to simply change the terms, but the competition would not allow it. States like New Mexico should just admit that California is a better place to make movies and use their wasted incentive money elsewhere.

Focus the filming effort where it will actually help. California and New York are the obvious front-runners, not just because of their long history in film, but also because they got tax incentives right through the California Film and Tax Credit and the New York Film Incentive. States are so concerned with stealing movies from each other (the way Pennsylvania is stealing Batman from Illinois), they are hurting themselves and the country as a whole. A concerted, realistic, and appealing federal tax incentive for homeland movie production is in order. Otherwise, Magneto wins and Captain America will start throwing a Maple Leaf shield.

Photo Credit: Wikimedia Commons