Lansing politicians want to bring film production subsidies back to Michigan. House Bills 4907 and 4908, which may be voted on during the lame-duck session, would offer a transferable tax credit for up to 30% of production expenditures and could cost taxpayers $2.1 billion over the next 10 years.

Michigan should give two thumbs down to this legislation. The state’s previous film subsidy program was a $500 million bomb that created no permanent jobs and failed to develop a local film industry. But subsidizing Hollywood could bring public health problems as well.

Taxpayer subsidies may contribute to higher rates of teen smoking, according to a 2009 study by Jonathan R. Polansky and Stanton A. Glantz for the University of California, San Francisco's Center for Tobacco Control Research and Education. Glantz and Polansky report that 1.1 million youths have been induced to smoke from imagery in films, and nearly 32% of them will later die of tobacco-induced diseases. It is important, the study says, to examine the degree to which states subsidize harmful imagery.

Thirty-five of the 147 movies released in the United States in 2008 were filmed in states that subsidized movies and “contributed 71 percent of the 11.4 billion tobacco impressions delivered to U.S. theater audiences by youth related films,” Polansky and Glantz write. One of those, the authors say, was underwritten by Michigan taxpayers: “Semi-Pro,” starring Will Farrell and Woody Harrelson, was filmed in Genesee County.

The reader may balk at the suggestion that adolescents who watch a cinematic depiction of smoking would therefore pick up the habit. But there is a lot of scholarship to suggest as much. A Dartmouth Medical School study published in 2003 found that the 10–14-year-olds with the highest exposure to smoking in films were 2.6 times more likely to start smoking than those with the least exposure.

Reviving film incentives would undermine another of the state’s programs. Michigan will spend nearly $3 million in general fund dollars through fiscal 2025 on its smoking prevention program. Does it make sense to also fund a program that encourages teens to smoke?

We’ve been here before. Between 2008 and 2015 the state ran a film subsidy program that wasted $500 million before Gov. Rick Snyder pulled the plug. Two state-sponsored studies showed the program to be a flop.

The first of these studies was conducted by a consultant at the request of the state’s jobs agency. The other was done by the nonpartisan Senate Fiscal Agency, and it concluded that the state’s program only generated 11 cents for every dollar invested. Both studies found the program to be a net loser for the treasury.

Other states have come to a similar conclusion.

In July the Rhode Island Department of Revenue published a study of the Ocean State’s 30% transferable film production tax credit and found it wanting. The authors estimated that from 2019 through 2021 Rhode Island’s film credit generated only 9 cents for every dollar invested. This may overestimate the impact of the credit, however, since the study assumed that 100% of film production can be attributed to the incentive.

Late last year, a consultant for the state of New York found that the Empire State’s film tax credit generated only 15 cents for every dollar spent. At least 16 states have conducted their own analyses of their own programs (some more than once) and found them to be net losers.

Academics have also studied film subsidy programs across the country and likewise concluded that they are ineffective. One Georgia study found that taxpayers there were subsidizing film jobs to the tune of $64,000 to $119,000 per job per year. Provided, that is, each film was a direct result of the incentive.

If film subsidies work, their greatest effect appears to be encouraging teens to smoke. The proposed new film incentives contain no restrictions on tobacco imagery. Michigan lawmakers could create a restriction, but it would be better to drop the idea of subsidies altogether.

Film incentive programs are ineffective and expensive economic development tools. The money would be much better spent fixing roads and bridges or cutting taxes for everyone. At a minimum, the state shouldn’t subsidize films that may encourage young, impressionable Americans to take up the very habit states also work to thwart.

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