It's almost an article of faith on the left that lowering taxes on corporations and job-creators would have no effect on job-creation (see also here, here, and here) . Conservatives believe that lowering taxes on corporations will have the effect of stimulating job growth and creating economic prosperity. This is reflected in conservative support for supply-side economics.
Just when this difference in beliefs seemed certain to derail any attempts between the parties to reach a compromise, a real-world phenomenon has been identified that suddenly shows promise in helping liberals understand the effect that taxation has on job-creation. I call this new economic principle "Supply-Side Snookinomics."
Snookinomics gets its name from "Snooki," the nickname for a character on the MTV reality show Jersey Shore. Last Monday, the show lost its $420,000 film tax credit when New Jersey Governor Chris Christie blocked it, citing the show's negative portrayal of the state and its citizens.
The popularity of Jersey Shore makes it unlikely that the loss of tax credits will have a significant impact on its economic viability. However, it does shine a spotlight on the whole issue of film incentives. Currently, 42 states plus the District of Columbia and Puerto Rico offer some type of film production incentive. Twenty-eight of those states offer tax credits. Though some smaller production companies benefit from these incentives, the vast majority of the recipients are major production companies and studios whose executives reside in the highest quintile of income-earners.
Ordinarily, liberals would be up in arms about the idea of "corporate welfare" being handed to the bigwigs at some multinational company. However, rather than being opponents of these tax breaks for the rich, they are avid supporters. Their bedrock support for the incentives wasn't even shaken when super-liberal filmmaker Michael Moore collected a million dollars in tax credits for his Viacom-funded anti-corporate greed movie Capitalism: A Love Story.
So, what are the reasons that supporters of production incentives give for providing these tax breaks and other subsidies? What could be so compelling about this program that even liberals would support the notion of giving a tax break to wealthy businessmen?
A 2010 article on Investors.com gives one liberal's opinion of what will happen when the State of Michigan gives huge tax breaks to wealthy Hollywood moguls:
According to [Michael] Moore, these tax incentives -- imagine it! -- "will mean jobs and money being pulled into Michigan."
Of course, Michael Moore is a bit of a wild card. Certainly other Hollywood liberals would be shocked by his sudden embrace of supply-side economics. The author of the article provides Moore's description of the reaction of his fellow liberals at learning the news:
"When the new film incentives were established, some in Hollywood said that it was an Internet rumor[.]" ... "My agent Ari Emanuel called and asked if this was real. I told him, yes, it is real, and he responded, 'I am getting this out to all of my clients because no state has anything close to this.'"
In every state with film incentives, you will find liberals to be the staunchest supporters of this brand of corporate welfare, and they will provide all sorts of data to lend support to the notion that these incentives create jobs, prevent the exit of companies seeking a better business environment, and generally contribute to the wealth of the states where these tax breaks are offered. On the whole, their arguments match those of conservatives who would like to see a better tax and regulatory environment for all businesses, not just the film industry.
In fairness, support for film production incentives is not limited to the far left. Both Rick Perry and Mitt Romney signed film incentive legislation as governors of their respective states. However, at least in the case of Texas, the incentives were a small part of a wider-ranging pro-business climate in the state. More to the point, lowering taxes for job-creators has been a consistent conservative position and fits well within a conservative economic model that predicts that lower taxes leads to job-creation and economic prosperity. Conservatives who oppose film production incentives do so primarily because narrowly applied tax breaks, where the government chooses the winners and losers, are significantly less efficient than providing broad tax relief and allowing the market to choose where to create jobs. Liberals, on the other hand, are being inconsistent when they claim that broad tax relief will not stimulate economic growth and job-creation while claiming that film production incentives will.
The film production incentive is just one instance where liberals selectively applaud tax relief, in the form of an "incentive," to an industry dominated by liberals. We see the same thing in the so-called Green Industry, where Democrats have decided to use a form of trickle-down economics to create jobs, while simultaneously arguing that the same thing is impossible on a broader scale.
This leads me to the definition of Supply-Side Snookinomics: an economic theory, embraced by liberals, which holds that tax breaks for the rich never create economic growth unless these tax breaks are applied to rich liberals.