**California Governor Proposes $750 Million Annual Film Tax Credits Boost**

California Governor Gavin Newsom has unveiled a significant proposal to enhance the state's film tax incentive program to $750 million annually, responding to the film industry's enduring challenges. If approved, this measure would make California's incentive scheme second only to Georgia's in terms of generosity.

Currently, California's film tax incentive program is capped at $330 million each year. The proposed increase, set to take effect on July 1, 2025, seeks to offer greater financial enticement to film productions. "California is the entertainment capital of the world, rooted in decades of creativity, innovation, and unparalleled talent," Gov. Newsom remarked. He emphasized that expanding the program would help retain film productions within the state, create thousands of well-paying jobs, and reinforce the critical connection between California communities and the film and television industry.

The move comes after industry and economic development officials in Los Angeles voiced mounting concerns over a continued decrease in film production within the state. Over the past two decades, states across the U.S. have been competing for Hollywood's attention, collectively offering more than $25 billion in filming incentives. Presently, thirty-eight states provide some form of incentive, with New York and Georgia notably leading the charge. Georgia, particularly, has distributed over $5 billion in tax credits since 2015, surpassing even New York's substantial $7 billion expenditure. In the same period, California has allocated over $3 billion to retain film production within its borders.

Proponents of film incentives argue they are fundamental to generating jobs, as productions require various local services, benefiting local economies from electricians to diners. However, economists caution that these programs are costly, yielding minimal returns on investment. Studies have consistently shown that the tax revenue generated by such programs typically amounts to only a fraction of the investment. In some cases, the cost to taxpayers for creating each job can exceed $100,000.

Film incentives vary significantly between states, ranging from cash rebates and grants to tax credits. In certain areas, these tax credits are transferable, meaning studios can sell them to entities with substantial state-tax liabilities. This enables studios to convert credits into cash while offering buyers modest tax relief. Notably, companies such as Best Buy, U.S. Bank, and Dr Pepper frequently purchase these tax credits. Even high-net-worth individuals sometimes engage in these transactions. For instance, the production company behind "The Trial of the Chicago 7" received a $5.2 million tax credit from New Jersey, which it then sold to Apple Inc. for $4.8 million.

Despite the financial intricacies and hidden economic impacts, the use of transferable tax credits remains politically viable, as the lost revenue does not directly enter state treasuries, rendering it less conspicuous.