the state. This reduces the fiscal impact of the tax credit such that the state may recoup as much as $1.04 per $1 of tax credit allocated, but not $1.13. In addition, taking a longer term perspective, the California Film and Television Tax Credit is keeping productions in the state, which will serve to maintain California’s dominance in the film and television industry. The industry is a significant part of California’s economy. For that reason, we argue that it is important to maintain California’s status as an industry leader with a qualified indigenous workforce. In the next section we briefly review the research literature on production location decisions in order to examine the impact of incentives on these decisions. We examine the role of incentives in global competition for production as well as state-level incentives. Other factors that affect location decisions are labor costs, crew depth and quality, and infrastructure development. We review the effects of these factors as well. A second section reports the results of an original survey of California film and television producers who have applied for the California Film and Television Tax Credit. A review of research on the net economic impacts of film subsidies makes up the third section. A final section discusses net economic benefits of film and TV subsidies, and provides a critical analysis the LAEDC report on the impact of the California Film and Television Tax Credit. We then close with brief conclusions. Location Decisions: What Does Previous Research Show? Numerous factors influence producers’ decisions about where to produce a film or television program. There is a complex relationship between incentives and the other factors contributing to production location decisions. We examine these issues here. Film Industry Incentives Research on production location decisions indicates that incentives have a significant impact on shifting productions away from California and in the emergence of new production locations in Canada, other countries, and other states. Other locations have chipped away at California’s lead with lower costs, incentives that are easier to qualify for, and fewer regulatory obstacles to production. Yet, for any given production location decision, while incentives are a significant factor, whether they are the tipping point in determining if a production stays or
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