Congratulations fellow North Carolinians, you are about to forfeit an untold amount of tax revenue to the millionaires at Warner Brothers – again – while the state faces a budget deficit upwards of $3 billion. Governor Perdue (D) announced in a press release last week that New Line Cinema, a subsidiary of Warner Brothers, will film a multi-million dollar motion picture in our state and will enjoy a 25% tax credit on qualifying expenses.
This summer, the General Assembly voted to expand the film production tax credit from 15% to 25%. The bill, HB1973, was a wish list of economic incentives (read: unfair tax treatment) sponsored by Reps. Bill Owens (D-Pasquotank), Pryor Gibson (D-Anson), William Wainwright (D-Craven), and Harold Brubaker (R-Randolph). Interestingly, the bill also created a tax exemption for wood chippers.
Warner Brothers also produces “One Tree Hill,” a television series, in North Carolina. The cost of credits to the state over the three tax years from 2007-2009 for One Tree Hill totaled $12 million. As a note, the total cost of credits to the state for those three years was just short of $36 million. Several of these films are rated R and one especially egregious film, with a cost of credits totaling $713,104, is titled “A Good Old Fashioned Orgy.” Meanwhile, North Carolinians have suffered sales tax hikes, higher fees, and income tax surcharges. The General Assembly raised taxes by $1.1 billion in 2009.
Further, businesses in other industries which have operated in North Carolina for years are subject to the full tax burden while Warner Brothers enjoys preferential tax treatment. Governor Perdue seems to think that “North Carolina was selected because of the state’s talented and trained film professionals and the water tank at EUE/Screen Gems.” Those of us in reality know that the state used our tax dollars to bribe Warner Brothers.
Proponents of the film production credits will argue that the preferential tax treatment the multimillionaires in California enjoy at our expense will boost the economy. However, these tax credits come at a cost as the loss in revenue must be offset by taxes on other goods and services paid by local businesses and individuals or by cuts to services such as education. What North Carolina needs to stimulate economic growth is an equitable, and much less onerous, tax structure. How can our political leaders claim to be for the “little man” when Average Joe is taxed to make up for the tax breaks enjoyed by wealthy Californians? Whose side are you on, Governor Perdue?