A. Ok, we can give every business $180 million. OR
B. We can spend that SAME $180 million and give EVERY BUSINESS $930,000,000 MILLION.
I think I am still taking B. I'm no logic expert, but I think splitting $930 MILLION is better than splitting $180 million.
I don't think you understand what you seem to be saying. We are giving away cold cash and the proponents are justifying it by pointing to "economic activity". Your average Wal Mart store generates about $80 million in economic activity. It is not profit. They have the cost of goods in that economic activity. They have the cost of operating the store in that. At the end of the day they may have $1 million in profit that will be subject to tax that we would give, at least partially, to the film people. So you can see that "economic activity" of a billion dollars is just not a lot.
So lets just follow this logic that giving this away is good and thus would be good for all business. It fails easily.
Let's just say there is a state somewhere that did this--give their businesses 30% of their expenses. Let's say that the entire revenues of all the businesses in this hypothetical state that gives what we give film makers to all their businesses is $100 billion. Let's pretend all their businesses are profitable and their net income subject to tax is 6%. So in this simple example they have 94% of revenues as expenses or $940,000,000. They would get if the state had it to pay $282,000,000 in tax credits. (30% of $940,000,000) They would generate only $60,000,000 in taxable income and if the tax rate was 6% they would pay $3.6 million in taxes.
So you see by this simple example there is no possible way the film tax credits work. If they were applied to every body in the hypothetical state the state would be upside down $279,000,000.
This is what happens in Louisiana with the film tax credits. We are upside down on them and we are by a very large amount.
This post was edited on 4/27 at 2:12 pm