Economists conservatively estimate that the Georgia entertainment tax credits resulted in an economic impact of about $5.1 billion in 2014. This is up from about $260 million in 2008. While these numbers are great, there are gaps in our fledgling entertainment industry. Post-production, which consists of activities such as editing and sound engineering, still mostly takes place out of state. Local small businesses struggle to keep up with large, established Hollywood studios that are able to take care of tax credits that disproportionately favor large corporations. And then you have economists who wonder whether we would see similar levels of economic impact if we were to provide tax incentives for other industries, such as healthcare technology.
There’s no question that more spending occurs in Atlanta as a result of the entertainment tax incentives. Studios are popping up all over the city and a large production from Jim Jacoby called the Atlanta Media Campus is set to open in Norcross. These are all positive developments for the city. The real question is whether we can continue this trend.
Hollywood is not going to let all of its talent and capital flee to the South. California is passing laws to triple the tax incentives for entertainment companies operating in California.
All of that being said, there is cause for concern that the studios opened so quickly subsequent to the passage of these tax credits. If production studios move to the cheapest location to film their projects, then what stops them from going to Mississippi or Alabama if those states pass similar legislation. A race to the bottom could result in large stretches of empty production studios that are abandoned as soon as other states get into the mix. Never forget, if Georgia makes a lot of money off of the entertainment industry, then so can other states.