Hollywood handouts: Why giveaways harm South Carolina

South Carolina is in the process of making the state a more competitive and attractive business environment across all industries, including the consideration of tax cuts for residents.  

At the same time, state legislators are attempting to attract specific industries with financial handouts, which now encompasses the film industry. 

Current film incentive structure 

Under current state law, a film production company can receive an annual tax rebate up to 25 percent for in-state employee payroll, up to $1 million pay for each individual employee with a minimum investment of $1 million.  

Film production companies are relieved of paying all state and local taxes on their investments if spending over $250 thousand. The state can then rebate up to 30 percent of a production company’s expenditures, as long as there is a minimum investment of $1 million. This is limited by 26 percent of the general fund portion of admission taxes collected by the State allocated to the South Carolina Film Commission. This amounts to roughly $10 million. 

Additionally, State and local government entities are forced to offer their “underutilized” properties to film producers for below market rates if the Department of Administration identifies the property as such. There is a cap on the daily rate that can be charged for rent. It is illegal to charge the film producers rent for 7 or less days of use within each calendar month. Film producers can take advantage of this free rent for a total of 21 days a year.  

New film incentives expansion 

H.3832 is on the State House floor for debate. This bill creates a new incentive program for live production shows, who can qualify for the same incentives but with a minimum investment of $250 thousand. However, a cap for live theater incentives will be introduced at $2 million. 

This bill would expand the overall annual rebate cap total from $10 million to $30 million across all production and theater companies combined. It would also allow unused rebates to be carried over for three years, which would likely result in surpassing the $30 million cap. 

The problem with film incentives 

The South Carolina legislature is in the process of considering various tax cuts, including income and property taxes. Legislation has struggled to progress due to unwillingness to limit spending.  

Omitting film and theater companies from paying taxes while allocating them rebates hurts the effort of limiting spending. The legislature needs that income to provide citizens with tax relief via surpluses. Unfortunately, surpluses are being used to give handouts to corporations and certain business sectors instead.  

South Carolina has a growing population, and it’s time to compete with neighboring states with our tax structure. According to a recent report by SCPC’s senior fellow, Vance Ginn, South Carolina ranks 21st in the nation in economic freedom behind all neighboring states.  

The way to continue to attract new professionals and industries is not through financial handouts, but through a fair tax structure that frees residents to work and keep more of their income. 

The film industry also has a precedent of boycotting states based on social issues, which the legislature appears to be taking up this year. If lawmakers are interested in attracting business investment, a better focus would be on the litigious environment of the State and the tax structure we all experience.  

Rather than focusing on picking winners and losers, state lawmakers should utilize this capital to go towards reducing the tax burden on individual citizens. Every dollar spent on something other than reducing taxation is lawmakers prioritizing that industry over taxpayers' pocketbooks.