The war among the states to see who can lavish the film industry with more generous tax credits in their attempt to become “the next Hollywood” continues, and it is quickly descending into a classic race to the bottom. A front-page article in today’s Wall Street Journal notes that the tax incentive bidding war has gotten so intense that it is hollowing out the old Hollywood labor pool and sending it on a road trip across the America in search of tax-induced job activity:
As film and TV production scatters around the country, more workers… are packing up from California and moving to where the jobs are. Driving this exodus of lower-wage workers — stunt doubles, makeup artists, production assistants and others who keep movie sets humming — are successful efforts by a host of states to use tax incentives to poach production business from California. […]
Only two movies with production budgets higher than $100 million filmed in Los Angeles in 2013, according to Film L.A. Inc., the city’s movie office. In 1997, the year “Titanic” was released, every big-budget film but one filmed at least partially in the city. The number of feature-film production days in Los Angeles peaked in 1996 and fell by 50% through last year, according to Film L.A. Projects such as reality television and student films have picked up some of the slack. But overall entertainment-industry employment has slid. About 120,000 Californians worked in the industry in 2012, down from 136,000 in 2004, according to the U.S. Bureau of Labor Statistics.
The labor migration has arisen in part because California hasn’t competed aggressively on the tax-break front, officials and executives say, while states like Georgia have made efforts to grab a sizable chunk of the industry. More than 40 states and 30 foreign countries are offering increasingly generous and creative tax incentives to lure entertainment producers.
On one hand, hooray for labor mobility! But seriously, this stinks because this labor shift is taking place in a wholly unnatural way, with a complex and growing web of tax inducements leading to massive distortions in this marketplace. Continue reading →
Jack Schinasi discusses his recent working paper, Practicing Privacy Online: Examining Data Protection Regulations Through Google’s Global Expansion published in the Columbia Journal of Transnational Law. Schinasi takes an in-depth look at how online privacy laws differ across the world’s biggest Internet markets — specifically the United States, the European Union and China. Schinasi discusses how we exchange data for services and whether users are aware they’re making this exchange. And, if not, should intermediaries like Google be mandated to make its data tracking more apparent? Or should we better educate Internet users about data sharing and privacy? Schinasi also covers whether privacy laws currently in place in the US and EU are effective, what types of privacy concerns necessitate regulation in these markets, and whether we’ll see China take online privacy more seriously in the future.
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Someone should consider making a movie about wasteful state-based film industy subsidies. It has become quite a cronyist fiasco in a very short period of time.
Some background: State and local tax incentives for movie production have expanded rapidly over the past decade. These inducements include tax credits, sales tax exemptions, cash rebates, direct grants, and tax or fee reductions for lodging or locational shooting. In 2002, only five states offered such inducements for movie production. By the end of 2009, forty-five states had some sort of incentives in place to lure film producers.
In 2010, the film industry received an estimated $1.5 billion in financial commitments from these programs. Unsurprisingly, these incentives have proven very popular with movie studios. Of the nine motion pictures that were nominated for Best Picture at the Academy Awards in 2012, five had received taxpayer-funded rebates, tax credits, and subsidies by state governments. “The Help” received a Mississippi spending rebate of $3,547,780 and “The Tree of Life” received $434,253 from Texas. In February 2012, Best Picture-nominee “Moneyball” received as much as $5.8 million from the state of California. It had grossed over $75 million at the box office. More recently, the biopic “Lincoln” received roughly $3.5 million in tax incentives from the Virginia Film Office.
Many state and local governments offer these inducements in the hope of attracting new jobs and investment; other simply seek to bill themselves as “the new Hollywood.” As William Luther of the Tax Foundation notes, “From politicians’ point of view, bringing Hollywood to town is the best of all possible photo opportunities—not just a ribbon-cutting to announce new job creation but a ribbon-cutting with a movie or TV star.” But it seems as if the glamor and prestige associated with films and celebrities have trumped sound economics since there is no evidence these tax incentives help state or local economies. Continue reading →
Reps. Jackie Speier (D-Calif.) and Steve Womack (R-Ark.) have introduced “The Marketplace Equity Act,” which would open the floodgates to anything-goes State-based taxation of the Internet and interstate commerce. The bill essentially sacrifices constitutional fairness at the alter of “tax fairness.” Building on concerns raised by state and local officials as well as “bricks-and-mortar” retailers, Speier and Womack claim that, as “a matter of states’ rights” and “leveling the playing field,” Congress should bless state efforts to impose sales tax collection obligation on interstate (“remote”) companies.The measure would allow States to do so using one of three rate structures: (1) a single blended state/local rate; (2) a single maximum State rate; or (3) the actual local jurisdiction destination rate + the State rate (so long as the State “make(s) available adequate software to remote sellers that substantially eases the burden of collecting at multiple rates within the State.”)
This builds on a long-standing effort by some States to devise a multistate sales tax compact to collude and impose taxes on interstate transactions. In the Senate, Sen. Dick Durbin (D-IL) has floated legislation (“The Main Street Fairness Act”) that would bless such a state-based de facto national sales tax regime for the Internet.
There is a better way to achieve fairness without sacrificing tax competition or opening the doors to unjust, unconstitutional, and burdensome state-based taxation of interstate sales. In a new Mercatus Center essay,”The Internet, Sales Taxes, and Tax Competition,” Veronique de Rugy and I argue that: Continue reading →
Cyberbullying constitutes one of the largest growth categories of recent cyberlaw legislative proposals, and many state legislatures have already enacted measures aimed at combating this problem using a variety of approaches. Those attempting to monitor ongoing developments in this field might find it useful to examine this National Conference of State Legislatures (NCSL) compendium of recent state cyberbullying bills.
In June, Berin Szoka and I published a PFF white paper, “Cyberbullying Legislation: Why Education is Preferable to Regulation.” That paper mostly address federal legislation and, in particular, we contrasted the approaches set forth in Rep. Linda Sánchez’s (D-CA) “Megan Meier Cyberbullying Prevention Act,” versus the “School and Family Education about the Internet (SAFE Internet) Act,” which was introduced in the Senate by Sen. Robert Menendez (D-NJ) and in the House by Rep. Debbie Wasserman Schultz (D-FL). Whereas the Sánchez bill would create a new federal felony to address these problems, the SAFE Internet Act proposes an education-based approach to the issue.
Generally speaking, Berin and I favor the latter approach, to the extent federal legislators feel the need to act. But we argued that state experimentation on this front may be the better way to go at this time. As the NCSL survey suggests, states
are pursing a variety of strategies and will continue to do so. In light of that, I’m not sure why any federal legislation is needed at this time. If the feds are really eager to push something at the national level, perhaps a generic public awareness / PSA campaign would make the most sense while more tailored state-based experimentation continues. This is rare example of where state-based experimentation with a cyberlaw issue actually makes a lot of sense.
On July 27th, The Progress & Freedom Foundation hosted a Capitol Hill panel discussion entitled “Online Child Safety, Privacy, and Free Speech: An Overview of Challenges in Congress & the States.” The event featured remarks from:
- Parry Aftab, Executive Director, WiredSafety.org
- Todd Haiken, Senior Manager of Policy, Common Sense Media
- Jim Halpert, Partner, DLA Piper
- Berin Szoka, Senior Fellow, The Progress & Freedom Foundation
We’ve just released the transcript of the event, which I have also pasted down below the fold in a Scribd document reader. Also, the audio for this event can be heard by clicking below:
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Here is the full event description: Continue reading →
Just a heads up for those of you in the DC-area… On Monday, July 27th, PFF will be hosting a Hill event on “Online Child Safety, Privacy, and Free Speech: An Overview of Challenges in Congress & the States.” I will be moderating the discussion and we will be joined by Parry Aftab, Executive Director of WiredSafety.org, Jim Halpert a Partner with the law firm of DLA Piper, Todd Haiken, Senior Manager of Policy for Common Sense Media, and my colleague Berin Szoka also of PFF.
The event will focus on the intersection of online child safety, privacy, and free speech issues at both the federal and state level. Bills introduced in Congress to address cyberbullying concerns propose either educational initiatives or a criminalization approach. Access to objectionable content also remains a concern and a new, government-mandated task force is looking into those issues. Meanwhile, state officials, including many state attorneys general, continue to explore age verification mandates for social networking sites and some have considered building on the federal Children’s Online Privacy Protection Act (COPPA) to expand “parental notification” mandates. The Federal Trade Commission (FTC) has recently announced an expedited review of COPPA to see if it is keeping up with new developments. The FTC is also exploring child safety in virtual worlds. New concerns about “sexting,” or the sending of sexual explicit images over mobile devices, has also raised new concerns led some lawmakers to ponder penalties.
How serious are these concerns? Is legislation or regulation needed to address them? What free speech issues are at stake? Should Congress take the lead or leave it to the States to experiment with different models? These and other issues will be discussed by the panelists at our July 27th event.
The logistical details are below and you
RSVP here.
“Online Child Safety, Privacy, and Free Speech: An Overview of Challenges in Congress & the States”
July 27, 2009
12:00 p.m. to 1:30 p.m.
Room SVC-208
Capitol Visitor Center
1st Street and East Capitol Street, NE (entrance across from Supreme Court)
Adam Thierer & I have just released a detailed examination (PDF) of brewing efforts to expand the Children’s Online Privacy Protection Act of 1998 to cover adolescents and potentially all social networking sites—an approach we call “COPPA 2.0.”
As Adam explained on Larry Magid’s CNET podcast, COPPA mandates certain online privacy protections for children under 13, most importantly that websites obtain the “verifiable consent” of a child’s parent before collecting personal information about that child or giving that child access to interactive functionality that might allow the child to share their personal information with others. The law was intended primarily to “enhance parental involvement in a child’s online activities” as a means of protecting the online privacy and safety of children.
Yet advocates of expanding COPPA—or “COPPA 2.0″—see COPPA’s verifiable parental consent framework as a means for imposing broad regulatory mandates in the name of online child safety and concerns about social networking, cyber-harassment,
etc. Two COPPA 2.0 bills are currently pending in New Jersey and Illinois. The accelerated review of COPPA to be conducted by the FTC next year (five years ahead of schedule) is likely to bring to Washington serious talk of expanding COPPA—even though Congress clearly rejected covering adolescents age 13-16 when COPPA was first proposed back in 1998.
We’ll discuss some of the key points of our paper in a series of blog posts, but here are the top nine reasons for rejecting COPPA 2.0, in that such an approach would:
- Burden the free speech rights of adults by imposing age verification mandates on many sites used by adults, thus restricting anonymous speech and essentially converging—in terms of practical consequences—with the unconstitutional Children’s Online Protection Act (COPA), another 1998 law sometimes confused with COPPA;
- Burden the free speech rights of adolescents to speak freely on—or gather information from—legal and socially beneficial websites;
- Hamper routine and socially beneficial communication between adolescents and adults;
- Reduce, rather than enhance, the privacy of adolescents, parents and other adults because of the massive volume of personal information that would have to be collected about users for authentication purposes (likely including credit card data);
Continue reading →
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.