[T]he movie industry ... is pleading in state capitals across the country for most-favored-tax status. Hollywood productions are highly mobile and can film just about anywhere. So they have taken to shopping around the country -- and the world -- for the most lucrative tax avoidance deal.
According to the Motion Picture Association of America, nearly 40 states have corporate tax carve outs or generous cash rebates to lure movie studios to their states. ...The Hollywood studios are ruthless profit maximizers and are expert at playing state suitors against one another. In the midst of California's recent $42 billion budget showdown, producers threatened to leave the state if the legislature didn't offer more inducements. So lawmakers in Sacramento gave the industry a new $250 million deal to stay put. ...
Of course, this is the same Hollywood film industry whose members fund causes and candidates that favor raising taxes on everyone else. ...
The movie industry's tax machinations are irrefutable evidence that low tax rates do affect business decisions. As a general principle, however, states shouldn't chase smoke stacks or film production crews with specific tax breaks. It makes much more sense for cities, states and the federal government to lower tax rates for everyone. New York City can survive without Alec Baldwin and "30 Rock," but it can't function without the thousands of small businesses that pay taxes without the benefit of lobbyists and loopholes.
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