Film rebate program is corporate welfare

Budget & Tax

Curtis Shelton | May 18, 2021

Film rebate program is corporate welfare

Curtis Shelton

The Oklahoma Film Enhancement Rebate Program is often referred to as a tax credit. However, as the name of the program tells us, it is a rebate program.

The difference between a rebate and a tax credit is simple. A tax credit provides a direct reduction in tax liability. A rebate is a direct payment to an entity to cover any expenses that were incurred. Currently the film rebate program offers up to a 35 percent rebate on qualifying expenditures with an annual cap of $8 million.

Comparing the state’s film rebate program with Oklahoma’s Equal Opportunity Education Scholarship program can show the distinction between the two.

If an individual gave a $500 donation to the Equal Opportunity Education Scholarship program, he or she would receive a tax credit totaling 75 percent of that gift. This would provide a $375 income tax credit to the donating individual. Oklahoma collects on average $794 per capita in income tax payments. An average Oklahoman, then, if he had made that $500 donation, would pay $419 in income taxes.

The film enhancement rebate, on the other hand, provided an average payment of $354,343 to 15 production companies in 2019. These companies received this money regardless of how much they may have paid in taxes to the state. This is why the film program has so often provided a minimum return to the state. In 2019 the state received $0.11 for every dollar paid out in rebate claims.

In comparison, a previous study showed the state received $1.24 for every dollar spent on the Oklahoma Equal Opportunity Education Scholarship Act.

The film rebate program provides direct payment to these TV and film productions companies and is more akin to a traditional corporate welfare program. Normally these sorts of direct payments are limited to what many believe to basic needs, such as food or shelter. The SNAP program, which provides food benefits, or the Low-income Energy Assistance Program, which aids in household energy costs, are examples.

Gov. Kevin Stitt and legislative leaders last week released a preliminary budget of $8.29 billion, a 7.6 percent increase from last year. This budget will include an expansion to this entertainment welfare program, raising the cap to $30 million. The Equal Opportunity Education Scholarship program would also be expanded under this budget agreement.

Curtis Shelton Policy Research Fellow

Curtis Shelton

Policy Research Fellow

Curtis Shelton currently serves as a policy research fellow for OCPA with a focus on fiscal policy. Curtis graduated Oklahoma State University in 2016 with a Bachelors of Arts in Finance. Previously, he served as a summer intern at OCPA and spent time as a staff accountant for Sutherland Global Services.

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