Debate over expanding North Carolina’s film incentive program prompted the Civitas Institute to investigate the types of movies produced here. Roughly $700,000 taxpayer dollars went to subsidize the production of a raunchy R-rated film entitled, “A Good Old Fashioned Orgy” in 2008. According to Internet previews of the film, the plot centers around a group of 30-somethings still living at home who decide to throw an end of summer party that turns into an orgy. The film’s parent company, GOF Productions, applied for and received film incentive credits from the North Carolina Department of Revenue totaling $713,104. The film has not yet been released in theaters.
In a document filing with the revenue department, GOF Productions, a subsidiary of Beverly Hills, California-based Endgame Entertainment, claims to have spent more than $4,754,000 in North Carolina filming the movie on wages and the purchase of goods. Based on North Carolina law, entitling the company to a 15 percent rebate of those costs, GOF Productions was issued a tax credit in the amount of $713,104.
North Carolina began granting incentives for film production based on a law passed in 2006 and signed by former Democratic Gov. Mike Easley, who allowed film production companies to apply for rebates of up to 15 percent of a production’s cost with the total maximum incentive being no more than $7.5 million.
Recently, the film incentive program was expanded. On July 22, 2010, Democratic Gov. Bev Perdue signed into law HB 1973, which would expand North Carolina’s film incentive program, upping the amount that can be rebated to 25 percent of total costs. If HB 1973 had been law in 2008, “A Good Old Fashioned Orgy” would have received an additional $400,000 of taxpayer dollars. According to analysis by the General Assembly’s Fiscal Research Division, HB 1973 will cost taxpayers more than $188 million in lost revenue over the next four years, even as the state faces massive budget shortfalls.
However, some want the credit expanded even further. Under current law, a production company can only claim up to $1 million in salary for stars who appear in the films. A bill introduced in the North Carolina House in 2010 would have removed that cap, allowing taxpayers of North Carolina to directly subsidize the salaries of millionaire movie stars like Tom Cruise or Will Smith. Perdue also supports allowing more taxpayer dollars to subsidize the salaries of big named Hollywood stars. According to a July 26, 2010 article in the News and Observer, Perdue states, “I think the people of North Carolina understand that when you bring in an Academy Award winner as an actor or an actress, you’ve got to pay them.”
The debate of whether to continue to expand North Carolina’s film incentive program will continue into next year even though more and more questions continued to be raised as to the effectiveness of the incentive program, the cost to taxpayers and the deservedness of those receiving taxpayer dollars.
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