Skip to comments.Uh-Oh: The Problematic Tax Breaks of ‘Sarah Palin’s Alaska’. Did her show receive a subsidy?
Posted on 03/30/2011 4:28:37 PM PDT by SeekAndFind
It isn’t too hard to imagine this becoming problematic for Sarah Palin on the campaign trail, as noted by the Tax Foundation:
In case you missed it, small government crusader and Tea Party favorite Sarah Palin’s TLC reality show “Sarah Palin’s Alaska” received a $1.2 million subsidy from the state of Alaska. The show spent $3.6 million on production in the state, meaning that Alaskan taxpayers covered a third of the cost of the show. The show will apparently not have a second season.
Because Palin is no longer a public official, she does not have to disclose her income; if she were to run for the presidency, she would have to file certain financial disclosure forms with the FEC (some of the data from her filings as a vice-presidential candidate can be found here). Nonetheless, some reports have put Palin’s earnings from the program at “roughly $250,000 per episode, or $2 million in total.“
Everything Palin has done has been perfectly legal, but it looks problematic for a crusader for small government to end up collecting a seven-figure paycheck from an endeavor that received a seven-figure subsidy, all set up by a program she signed into law. Of course, Palin set up the subsidy in 2008, and the TLC series wasn’t filmed until the summer of 2010, after Palin resigned as governor.
UPDATE: I see some Palin fans are quick to insist that there’s nothing worth criticizing here.
Alaska may be unique, in that the revenues from petroleum enable it to enjoy no state sales tax and no individual income tax, the lowest individual tax burden in the country. Oil revenues have meant that the state enjoys better budgetary circumstances and lower unemployment than most other states. So a conservative may argue that in an era of a $1.6 trillion annual federal deficits, federal funding for PBS, NPR, the National Endowment for the Arts and National Endowment for the Humanities may be unaffordable luxuries, while finding no particular problem with the state of Alaska choosing to pay millions to subsidize television programming that they believe promotes the state’s image and attracts tourism dollars.
Still, should governments be in the business of subsidizing television programs? The precise arguments against PBS and NPR – that in today’s much more diversified media environment, almost all of the programming on government-funded radio and television networks could thrive in the private sector without government subsidy – would apply to the Alaska-based shows, no?
If a free-market conservative recoils at the idea of the government picking winners and losers in the market by, say, extending TARP funds to GM or punishing offshore drillers and subsidizing firms with self-proclaimed “green jobs”, wouldn’t a state’s decision to fund Show X instead of Show Y seem comparably problematic? In light of all the legitimate needs for taxpayer dollars – police, hospitals, infrastructure projects — is bringing a film or television production crew to town really the best way to use taxpayers’ money?
The traditional argument is, “this creates jobs.” The defenders might even call it a stimulus program. Of course, measuring the precise job creation effect is challenging; according to a report in the Fairbanks Daily News-Miner, declares that “Sarah Palin’s Alaska” program’s “application does state 14 jobs, lasting an average of 2.5 months, were created in Alaska through the show. That is about $80,000 for each 2.5-month job.”
Late last year, Josh Barro, the Walter B. Wriston Fellow at the Manhattan Institute, looked at the business of film subsidies by cities and states and found them economically disappointing:
A new report out Saturday from the Michigan Senate Fiscal Agency looked at that state’s film tax credit program — the country’s most generous — and found that even under the most optimistic assumptions, tax receipts driven by new economic activity barely offset 10% of the cost of awarding film tax credits. It estimates that the $125 million Michigan will spend on film credits in FY10-11 will generate just $13.5 million in new tax receipts, for a net fiscal cost of $111.5 million.
Overall, the report does not provide good news for supporters of film subsidies. The report finds the credits will generate just $78.5 million in private sector activity, well below their fiscal costs. It says job creation from film subsidies is “negligible” — since inception in 2008 they have raised employment in the state by just 0.016% — and notes that 47% of credit payments leave the state without generating any economic activity in Michigan.
Returning to Alaska, isn’t the idea of a state government subsidy for “Sarah Palin’s Alaska” particularly ridiculous? Doesn’t the concept and title alone make it all but impossible for the producers to film the program anywhere else? And with the program generating the epic media interest and monster ratings it did (averaging 3.2 million viewers), wouldn’t that make the program a worthwhile risk and profitable for the producers even without the state
writing a check offering a tax rebate for $1.2 million to cover the production costs? (Upon further review, I see readers’ complaint that this wording misleads.)
UPDATE: Palin offers a comment on the matter to the Daily Caller, including:
“It’s also a false accusation to suggest that signing this bipartisan bill somehow goes against my position on the proper role of government. I’ve said many times that government can play an appropriate role in incentivizing business, creating infrastructure, and leveling the playing field to foster competition so the market picks winners and losers, instead of bureaucrats burdening businesses and picking winners and losers. Again, I can’t speak for what other states do, but Alaska’s film production tax credit program is an effective way to incentivize a new industry that would diversify our economy. It worked. The lawmakers’ successful legislation fit Alaska’s economy, as our economy is quite unique from other states’ due to our oil and gas revenue. Perhaps it would behoove people to learn much more about the 49th state’s young economy before making broad accusations about the efficacy of business programs.”
The problem is that every advocate of every tax break, subsidy, and earmark contends that their proposal “incentivizes business.”
If limited government is to mean something, it means there must be some areas of economic activity that government does not seek to steer, influence, promote, regulate, or restrict. Movie-making and television production would seem to be a good place to start.
geez. Im so over these folks. The poor woman has not even said she is running.
Yeah Sarah already issued a statement on this BS..same BS, different day. These people just can’t get over themselves can they..they wake up in the morning and try to find some BS to stick to the wall
This smarmy hit from the right has already been debunked on FR today. Will find link...
She isn't the governor, and old Jim doesn't seem to be a crusader in changing the incentive. So, I guess he is just talking out his butt.
Old news. Palin set’s ‘em straight:
Twitter fight followed between Geraghty (NRO), Treacher (DC), RA Mansour (SP). Result? Palin won on facts.
Palin haters breaking wind again. This is a non-starter.
Actually by Palin using Alaska as a back drop for her program she gave a huge tourism boost to the state. Every state has a tourism budget to promote their state. I doubt anybody else would have provided halve the audience that she did. So, in reality she is probable under paid.
There at nine other Alaska Reality shows in addition to “Sarah Palin’s Alaska.” No doubt all receive film tax credits by the same law that helped Sarah:
Alaska State Troopers
Flying Wild Alaska
Gold Rush Alaska
Ice Road Truckers
Alaska Wing Men
The Toughest Race on Earth: Iditarod
Tougher in Alaska
Out of the Wild: The Alaska Experiment
Picayune ain’t just a city in Mississippi...
What was it that Ann Coulter called the National Review crowd? Girly-men? This column sounds like the back-biting sometimes heard in girls’ high schools.
"I don't know if you are going to address Geraghty's outrageous attack on Palin's show and the alleged 'tax subsidy' she granted herself (three years before she ever had the idea to make the show - she must really be prescient) in NRO today. I know you have so many things you have to cover every day you might not have time - understandable. I find such a biased, ill informed attack coming from NRO really sad. Why do they fear Ms. Palin so much? What has she ever done to earn their ire - other that stand for homespun American values and principals? Why single out Ms. Palin's little info-mercial for Alaskan Tourism? Geraghty calls the Alaskan 'tax credit' a 'government subsidy' of Palin's film. What?! I missed the part where the 'tax credit' was specifically earmarked for Ms. Palin. Many localities offer tax credits to bring 'business' to their areas, whether film, manufacturing, pharmaceutical, etc. Has Geraghty ever stopped to think that a 'tax credit' is a kind of 'tax cut' - I guess not. Aren't lower taxes as an incentive to spur free market expansion supposed to be a basic tenant of conservatism? I guess Geraghty missed that meeting. It seems Geraghty has also missed the fact that Burnett Productions, and Ms. Palin, will all pay federal income tax on what they earn from the showing of the film - mainly from TLC and advertisers. The Alaskan Tax credit will only act to lower this tax burden.
Not only am I saddened by these attacks of 'one of our own' but I am fearful. If the GOP nominates another 'Bush Republic' to run against POTUS, the GOP will lose. The Tea Party conservatives will stay home, they will not work for another 'McCain' and the unions will turn out the vote for the incumbent (rhetorical question coming) why don't the establishment Republicans see this?"
No, my friend, I won't be addressing it. I think you said all that needs to be said.
The show spent $3.6 million on production in the state, meaning that Alaskan taxpayers covered a third of the cost of the show.
A state that is friendly to tv show producers is a good thing.
Maryland had a good industry going for local actors, crew, drivers, caterers, etc with the several David Simon series -
One of the characters came too close to the real life Baltimore mayor who was running for governor, so when the real life man became governor, he stopped the subsidies that had made the productions possible.
So he stopped the jobs of hundreds of skilled workers in MD, because his petty revenge was more important than jobs.
A tax credit is not a subsidy.
Ethanol gets a subsidy.
These guys got a tax credit.
I agree. People seem to forget the all important difference.
TAX CREDIT — I Don’t take more of your profit from you.
TAX SUBSIDY — I give you money taken from other tax payers.
What did she do that was illegal?
Poor moonbats didn’t get the memo. It’s EXTREME DRACONION CUTS and the EVIL “TEA” PARTY. They seem to be fracturing under the weight of their idiot talking points.
Geraghty can't see the difference between a state government and the federal government doing this. If I was Governor, I'd have tax credits too to lure businesses and jobs.The film industry is very lucrative because that means money is spent on hotels, restaurants, catering, travel, etc. In fact, states are SUPPOSED to be doing this in the first place, without Washington sucking up the money and then redistributing it back to states in crumbs.
Pure desperate and pathetic hit piece that's already been destroyed.
In what way?
The show spent $3.6 million on production in the state, the tax credits were for $1.2million. In my wierd way of looking at it the state investment of $1.2m produced $3.6m. It’s that type of return that most states were hoping for when they passed the tax credits for in state movie production. Hope that explains it.
Okay, I see your point. I guess that would depend if the 3.6 million was all spent in the state?
It’s sad what has become of National Review. So many phonies now.
So, the controversy was a lie. Mark Burnett is the guy getting the tax break. Palin had nothing to do with it. Other Alaskan shows probably get the same tax break.
This was shoddy journalism. Nothing more.
didn’t she sign this law BEFORE she was picked for McCain’s VP slot? dang, now she’ clairvoyant !!!!
Actually the film credits helped Alaska more than anything else.
God knows how much the show brought to the local economy. Shopping, meals etc.
Only $1.2 million? What a bargain! Alaska easily got over ten times that in good-will advertising from Sarah’s program...
***Picayune aint just a city in Mississippi...***
Right! It was the brand of a very potent cigarette that I often smoked when a teen in the 1950s!
That being said..... The left is really afraid of Palin, as they go after her for doing what was essentially a travelogue/turism series for her state of Alaska. All states pay millions each year to promote tourism.
Exactly! ...Consider TV series done here in my DFW area, like Walker-Texas Ranger and Dallas. Then there all of those done in SanFran, LosAng, Boston, NYC, Chicago, etc. Beyond the TV there are all of the movies made in such cities.
Every one of those cities provides incentives for the TV or movie productions, which employ many locals and adds considerably to the patronage of hotels and restaurants; not to mention the increase in tax revenue and promotion for the cities regarding possible tourism.