Film credits: Economic gain or corporate welfare?

Today's Monitor has a glowing story about the film industry bringing money into Bombtown and frankly, it made a good case for us locals seeing some ca-ching land in our cash registers. But what is the balance sheet in the give and take between film industry money spent here vs. tax credits given away to the film industry? I Googled to find out, and found this:

from The New Mexico Independent:
"...Citing a 2008 study of New Mexico’s film industry subsidies, Los Angeles Times business columnist Michael Hiltzik Friday questioned California’s own $100 million-a-year tax credits for Hollywood film productions, calling them “corporate welfare.” The study showed that New Mexico saw only 14 cents in returns for every dollar it spent on film production tax credits...A competing report commissioned by the NM film industry in January 2009 by the New Mexico Film Office found a much more positive economic impact than the report cited by Hiltzik. Conducted by Ernst & Young, the study concluded that the program had earned $0.94 in additional tax revenue for each $1.00 paid out in incentives based on the 2007 value of present and future year tax receipts and the 2007 value of state film production tax credits..."

But with each state competing to provide more lavish tax breaks to the film industry than the next, one has to ask if this is a race to the taxation bottom. Neale Peirce says this in Citiwire: "...The raw bottom line is this: Subsidy-induced film activity may have glitz and surface appeal. But nationally, it’s a washout — film production lured from one place to another is classic “robbing Peter to pay Paul.” At the end of the day the country’s no less prosperous. The net economic impact is simply to enrich the filmmakers at the expense of state taxpayers. Even a Cecil B. DeMille would blush."

Or, I would add, the country's no more prosperous, and the state that "wins" is getting the least return for its efforts. Like most free lunches, this one is probably too good to be true. If New Mexico is such a great place to film, we shouldn't have to give away the store.