Illinois’ film tax credit program is theatrically bad
Illinois’ film tax credit program is a slap in the face to the state’s small business community outside the spotlight, does little to grow good jobs and is rife with corruption.
Gov. J.B. Pritzker joined TV mogul Dick Wolf in Chicago Thursday to celebrate the extension of Illinois’ film tax credit program until 2026.
Wolf gets millions of dollars in tax breaks from the state in exchange for shooting shows like “Chicago Fire” and “Chicago P.D.” in Illinois.
“Today, I’m proud to say that we are once again taking a step toward creating new jobs and building an Illinois economy that works for everyone,” Pritzker said.
But Illinois’ film tax credit program is a slap in the face to the state’s small business community outside the spotlight, does little to grow good jobs and is rife with corruption.
Take Illinois’ business climate. When it comes to movie magic, Pritzker acknowledges lower taxes attract investment. But his “fair tax” proposal would make Illinois’ business tax burden among the highest of any state in the nation. Wealthy producers catch breaks. Most other employers get hosed.
And unfortunately, there is scant evidence that giving special tax credits to the film industry in particular is a proven pro-growth policy.
“Movie production incentives are costly and fail to live up to their promises,” researchers for the nonpartisan Tax Foundation wrote in 2010.
“Like a Hollywood fantasy, claims that tax subsidies for film and TV productions … are cost-effective tools of job and income creation are more fiction than fact,” wrote the Center on Budget and Policy Priorities. “In the harsh light of reality, film subsidies offer little bang for the buck.”
This is why states across the country are eliminating or significantly paring back their film tax credit programs after an arms race in the early 2000s. From 2009 to 2018, 13 states eliminated their film incentive programs, according to the National Conference of State Legislatures. Many others, including film-tax-credit pioneer Louisiana, have capped the credits.
Illinois has no cap. And the bang for Illinois’ buck? Hard to say.
The Chicago Sun-Times reported in 2018 that the state has doled out $420 million in film tax credits to more than 1,800 productions. But no one has ever audited the program. And taxpayers aren’t allowed to see the spending records production companies file with the state to claim their credits. Former Illinois Attorney General Lisa Madigan deemed them trade secrets.
Keeping those payments hidden prevents scandal. When the state released limited spending records in 2015, watchdogs quickly pointed out that the TV show “Mob Wives Chicago,” which received more than $600,000 in film tax credits, shoveled $66,000 in payments to women with mob ties, and even paid to exhume the body of mob hitman Frank “The German” Schweihs.
On the campaign trail, Pritzker promised more transparency in the state’s film tax credit program. He hasn’t delivered. And taxpayers have no reason believe these favors are above board.
Besides Dick Wolf, the main beneficiary of Illinois’ film tax credit program is a clout-heavy complex called Cinespace Chicago Film Studios. From July 2017 to July 2018, Cinespace received $8 million in payments from film tax credit recipients, according to the Illinois Film Office – nearly double the next-highest vendor over that time.
Cinespace was born in 2011 after receiving $17.3 million in grants from former Gov. Pat Quinn. Among other political power players, key in securing those grants and other tax breaks was former Teamsters boss John Coli Sr., whose union would go on to make money on film and TV productions at the complex.
Days before Pritzker signed the tax credit extension, Coli plead guilty to extorting Cinespace in exchange for labor peace.
And how did the feds catch Coli? Cinespace President Alex Pissios. He wore a wire for the FBI to avoid serving potential prison time over allegations of bankruptcy fraud.
“You can’t have a f—— rat in the woodpile,” Coli said of the Cinespace scheme on Pissios’ hot mic. “You can’t have a whistleblower here.”
Illinoisans may remember Pissios from a 2016 scandal, when Quinn, then a lame-duck governor, gifted Cinespace $10 million in taxpayer money to buy land that it later turned out wasn’t even for sale.
Pissios is still the president of Cinespace. And thanks to Pritzker, millions of dollars in business will keep flowing his way.
Lawmakers serious about fairness, growth and transparency would be wise to call “cut.”