Expansion of film tax credit shows the DFL believes in some corporate tax cuts

Back in 2021, Minnesota enacted a roughly $5 million a year tax credit intended to attract TV and film productions to the state. The Film Production Tax Credit:

…provides an assignable 25% income tax credit to production companies that expend at least $1,000,000 in a consecutive 12-month period for eligible production costs.

The credit was due to sunset at the end of 2024 but, in the recent legislative session, it was expanded to $25 million annually and extended in perpetuity.

In simple terms, the DFL is lowering the corporate tax burden in the state in order to attract more business activity to the state.

But why not extend that more broadly and simply lower the state’s corporate tax rate? Give to all businesses some of what the TV and movie industry is getting?

There is evidence that such policies work to boost economic activity. By contrast, the evidence for targeted measures like this is much less compelling. Indeed, a National Conference of State Legislatures report notes that state evaluations of such programs commonly found they do not provide a substantial return on investment. Bringing a call center or factory to the state might be less “sexy” than bringing the production of a movie or TV show, but the employees earn and spend money all the same.