Welfare For Hollywood

Chris Christie vetoed a subsidy for "Jersey Shore." Robert Soave explains why such policies are so egregious:

The aim of the incentives is to create economic growth and jobs by encouraging new industries to move to a given state. But study after study has revealed the obvious: such programs merely take money from some businesses and give it to others. This weakens the taxpaying businesses just as much as it helps the studios. Hurting efficient, self-reliant industries in order to prop up artificial, subsidized ones does not grow a state’s economy in any meaningful way. In my home state of Michigan, entertainment studios can bill the state for a staggering 42% of their production costs.

Josh Barro agrees:

A new report … from the Michigan Senate Fiscal Agency looked at that state's film tax credit program — the country's most generous — and found that even under the most optimistic assumptions, tax receipts driven by new economic activity barely offset 10% of the cost of awarding film tax credits. It estimates that the $125 million Michigan will spend on film credits in FY10-11 will generate just $13.5 million in new tax receipts, for a net fiscal cost of $111.5 million.

(Video: Trailer for "House of the Rising Sun," which the state of Michigan awarded $435,000. The film only took in $100,000 in DVD and Blu-Ray sales.)