The Senate has cut a tax break for the film industry from the stimulus package.
I have three reactions.
One, I can understand the logic of tax breaks for the film industry, particularly at the state level. Apparently it's working well for Michigan. In limited cases, with carefully targeted incentives, it makes sense.
Two, I would like to see my friends in the film industry keep working.
But, three, what the hell were these people thinking? Tax breaks for movie stars? Seriously? These are not carefully targeted incentives; these are handouts to multinational corporations. In an era where excessive compensation is becoming a hot political issue? I understand that it's not quite "tax breaks for movie stars," because the vast majority of the people in the entertainment industry are normal, average, hard-working, middle class folks. I also understand that other industries are getting tax breaks.
But that's not how it's going to come across. You might as well argue about giving tax breaks to Bill Gates or Oprah Winfrey. I'm willing to bet that if you looked at the top 20 movie stars of 2008 and how much they were paid last year, the total would probably be close to $246 million. If you looked at the top 20 movie stars, top 20 directors, and top 20 producers, it would be way above $246 million.
Some more comparisons: $246 million is half of Dark Knight's domestic gross. It is a quarter of Dark Knight's total worldwide gross (which is almost a billion dollars). Gran Torino and The Curious Case of Benjamin Button, two sober dramas, have a combined total domestic gross, at this date, of $226 million, or just about what the Senate was considering giving Hollywood as a tax break.
The stimulus package is supposed to be out filling potholes and taking care of average working people - giving them jobs, and unemployment benefits and health care when they desperately need it. Tax breaks for movie studios is utterly antithetical to the spirit of this legislation. This is not stimulus; this is corporate welfare.
Disney just reported its latest quarterly earnings. Income dropped sharply. But it still reported profit of $845 million - for just this quarter. Its business is changing dramatically, and it will have to make major changes. Which it is doing. That's management's job.
But it is not the government's job.