An Oscar for the tax man?

As Hollywood's annual orgy of self-congratulation, the Academy Awards ceremony, is warming up in the wings, Glenn Reynolds of Instapundit  has penned a valuable WSJ op-ed detailing the enormous tax breaks lavished on American film production. Make no mistake, these are special interest tax breaks, and the fat cats benefitting just happen to be among the most self-righteous liberals posing as advocates of the little guy. Hypocrisy on steroids.

To kick off his piece, Reynolds aptly cites über-populist Eva Longoria:

At the Democratic National Convention last year, actress Eva Longoria called for higher taxes on America's rich. Her take: "The Eva Longoria who worked at Wendy's flipping burgers-she needed a tax break. But the Eva Longoria who works on movie sets does not."

Actually, nowadays an Eva Longoria who flipped burgers would probably qualify for the Earned Income Tax Credit and get a check from the government rather than pay taxes. It's the movie set where she works these days that may well be getting the tax break.

The size of the tax breaks and subsidies received by film making special interests is astounding:

About $1.5 billion in tax credits and exemptions, grants, waived fees and other financial inducements went to the film industry in 2010, according to data analyzed by the Center on Budget and Policy Priorities. Politicians like to offer this largess because they get photo-ops with celebrities, but the economic payoff is minuscule.

Equally astounding are the boondoggles associated with start-struck governors and state legislatures:

Sometimes it is even worse, as demonstrated by Michigan's effort, begun under former Gov. Jennifer Granholm, to woo the motion picture industry with an expensive state-of-the-art studio facility built on the site of a former General Motors GM +2.26% factory in Pontiac. State leaders ballyhooed the plan as a way of moving from old-style industry to new.

Despite tens of millions of dollars in state investment, the promised 3,000-plus jobs didn't appear. As the Detroit Free Press reported last year, the studio employed only 15-20 people. That isn't boffo. That's a bust. The studio has defaulted on interest payments on state-issued bonds, and the guarantors-the state's already stressed pension funds-may wind up holding the bag. "In retrospect, it was a mistake," conceded Robert Kleine, the former state treasurer who signed off on the plans in 2010.

It is time for Hollywood to take a big dose of its liberal medicine and end the fat cat subsidies states have been doling out. But don't count on any self-reflection at the Oscars®. Derisive laughter is the appropriate response to Hollywood hypocrisy.  

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