FREE ENTERPRISE CLUB: Arizona Taxpayers Deserve Better than Funding Hollywood

By the Arizona Free Enterprise Club |

The recent implementation of film tax credit subsidies in Arizona has sparked intense debate among residents. Under a law passed in 2022, movie production companies filming in the state can now receive refundable tax credits that vary based on their spending. For production costs up to $10 million, they can claim 15 percent, while expenditures between $10 million and $35 million yield 17.5 percent. Filmmakers spending over $35 million can benefit from a maximum credit of 20 percent, with an additional 2.5 percent available for meeting specific criteria.

However, the term “refundable” poses significant implications. If a studio’s tax credits exceed its tax liability, the State of Arizona is obliged to issue a refund. This has raised alarms over the financial impact on Arizona’s economy, especially as taxpayers are expected to foot potentially staggering annual bills.

The estimated cost of this tax incentive scheme could reach $125 million each year, prompting questions about its effectiveness. Critics argue that such a substantial investment should yield tangible benefits for the state. Yet, under the current guidelines, studios can potentially receive these refunds without releasing or distributing their films. Consequently, taxpayers might unwittingly support projects that vanish into obscurity.

This situation has led to growing calls for a reevaluation of the program, with proponents of fiscal responsibility urging the state to reconsider how taxpayer dollars are utilized in support of the film industry.