Multinational Corporations, like all corporations funded by speculative shareholders, are legally obligated to pay shareholders the highest possible profit at year’s end. To keep investors happy, that profit is kept high by cutting production costs… usually at the expense of the technicians and workers who actually produce the work. The old argument “what’s good for the goose is good for the gander” insists that anything that keeps corporate profits high for the multinationals translates into a benefit for all industry workers, because more work is done and the benefit is shared by all. That’s the “Aid The Job Creators At Any Cost” position.
But lately Hollywood artists and technicians are being told— after other places have lured productions away from California by lowering taxes and offering massive subsidies to film productions— that California taxpayers must match tax relief schemes elsewhere. For over a hundred years, California has built a one-of-a-kind production industry to support film making and provide high end local services to filmmakers. Those facilities exist nowhere else. I’m a bit astonished that the multinational film companies would dare whine so loudly because they can’t have California convenience and high end Hollywood support JUST AS CHEAP as a bunch of empty warehouses in Mexico (or wherever). But I suppose I shouldn’t be surprised they’d resort to such complaints.
There’s no mystery about how corporations work. The primary purpose of any corporation—its sole job—is to create profit for its investors and grow itself. The lower the production cost versus the higher the net profit, the wider the profit margin. We also know that the lower the pre-estimated production cost, the more projects get green-lit. It’s obvious the multinationals ALSO know all about squeezing that process at both ends. Tax subsidies from location governments is one way they do it.
Good for the partners and shareholders, maybe. But not so good for everybody else, the state government and local economy included. Because the only one who really gains any positive long term benefit from such subsidy-bidding wars are the multinational corporations who pit other locations against one another. The local workers get some short term labor out of it, and the local economy gets a brief push… but most of the money coming in goes right back out to imported specialists.
Industry hubs spring up and grow where any industry is offered heavy local subsidies as an incentive. It happened in Detroit too, in the auto industry. And in Pittsburgh, in the steel industry. When those industries were lured elsewhere, later on, the inflated local economies they had created simply collapsed in their wake. ANY such single-industry economic boom will cave in when that industry moves on in search of a better deal down the road, leaving other businesses and taxpayers in the stricken local economy to pay extra over the long run. Companies have some incentive to stay in one place… but NOT corporations.
Plus, film isn’t like manufacturing. It leaves less investment in infrastructure, and less long term benefit to the local inhabitants of places that offer massive tax benefits and less legal regulation. But governments are starting to wise up and realize that film production is like a circus… it comes to town with a lot of noise and hoopla, but it creates a mess the whole town has to pay to clean up.
So to answer the question: Why CAN’T the film industry just pay its taxes like everybody else?
Of course the answer is clear. Because, as has happened in all other industries wherein multinational corporations have taken over, the overreaching greed of the corporations in search of a lower bottom line has resulted in a situation where the big money industries lean on local economies to reduce capital outlay and shop their productions around at the expense of the local taxpayer and business professionals. Even though other local businesses must pay more taxes to make up the shortfall caused by the incentives and tax breaks paid out to attract the multinational… even after it has moved elsewhere.
So, why not stop the incentive wars, at least in Hollywood? And have everybody pay the correct amount of taxes in Hollywood, to support the California economy?
Because the corporations will ALWAYS go elsewhere to shave a few cents off the bottom line to pay their investors. They have no loyalty to individual communities or their inhabitants— only to the almighty dollar.
Greed wins, and the actual workers and infrastructure created by the vanished industry are left behind to go bankrupt in its wake.
So, yeah. That’s pretty much it.