Issue Tool Kit: The Top Eight Reasons Why Hollywood Film Subsidies Are a Terrible Idea

California’s $750 million tax credit for a wealthy industry burdens taxpayers amid a massive budget deficit.

How long until Newsom’s Hollywood Cashectomy?

🕒 3.5 minutes

Sacramento’s Misplaced Priorities

A few weeks ago, Governor Gavin Newsom signed a $750 million annual film tax credit expansion at a Burbank press conference, declaring, “We’ve got to step up our game.” With California facing a massive multi-billion dollar budget deficit papered over with accounting gimmicks, this handout to Hollywood—raking in over $100 billion yearly—diverts funds from taxpayers and essential services. Here are eight reasons why these subsidies represent a fiscal and moral travesty, favoring a connected elite over the public good.

1. Draining Taxpayer Funds

The $750 million could repair crumbling infrastructure or fund struggling schools. Small businesses face punishing taxes without relief, yet Sacramento prioritizes an industry that hardly needs handouts. Taxpayers deserve policies that serve their needs, not Hollywood’s bottom line.

2. Exaggerated Economic Benefits

Advocates claim credits create jobs, but rigorous studies show just $0.20-$0.30 in economic activity per dollar spent. Many jobs prove temporary or are filled by out-of-state crews. The “multiplier effect” fades when producers pack up and leave, leaving communities empty-handed.

3. Subsidizing a Wealthy Elite

Subsidizing this affluent industry while ordinary Californians face rising costs is fundamentally unjust. Taxpayers should not bankroll studios that thrive without government help.

4. Unfairly Picking Winners

Tax credits favor Hollywood over other industries, violating the principle that the government should not pick winners and losers. Why should studios get breaks while manufacturers or farmers do not? This meddling distorts markets, funneling resources to a privileged few.

5. Fueling Cronyism Concerns

Hollywood donated over $100 million to Democrats in 2024, including $50 million to Biden and $30 million to Harris, per OpenSecrets. Of course there was probably a lot more out of sight. Newsom, with 2028 presidential ambitions, signed this $750 million gift amid this flood of liberal cash, suggesting taxpayer funds reward political allies, eroding public trust.

6. Global Subsidy Race

California’s credits counter incentives from Georgia and Canada. To make filming economical, California should pursue regulatory reforms and tax relief for all, benefiting everyone, including Hollywood, not just targeted subsidies.

7. Undermining Fiscal Discipline

With rising homelessness and underfunded pensions, California cannot afford Hollywood handouts. Budget woes demand restraint, not subsidies for an industry thriving elsewhere.

8. Eroding Public Trust

Subsidizing a politically connected industry suggests favoritism over fairness, undermining the moral ideal of a government accountable to all.

In short, California’s film tax credit burdens taxpayers, distorts markets, and smells of cronyism. Sacramento should enact policies that treat all Californians equally,, not that advantage a privileged few.

Hopefully, these articulated reasons will help you talk about why taxpayer subsidies of California film production are just a bad idea.