An incentive by definition is something that motivates an individual to perform an action. For example a coupon is an incentive because it gets you to buy a certain product at a discount. In the film industry, tax credits exist as an incentive to attract production to certain areas. Most industrialized nations offer a tax credit program and here in America most states offer some kind of film incentive program.
Film In LA just released their annual film production report and Louisiana, has just taken over the #1 spot for film production largely due to the fact that the state's tax credit is uncapped and there is no budget limits. Louisiana's program also encourages independent filmmakers to apply for tax credits, which is crucial, in my opinion. Yes big budget productions are nice but film commissions need to focus on filmmakers who live in the area and besides movies that cost a few hundred thousand are more frequent.
California comes into the rankings at #4, behind Louisiana, Canada and the UK. California's tax program is capped at $100M and it's based on a lottery system for projects under $75M. A bill has been introduced to allow California's tax program to increase and allow productions over $75M to apply. In addition, Los Angeles mayor Eric Garcetti has appointed Ken Ziffren as his 'film czar' to help formulate a plan to resurrect film production inside LA. I'm not exactly sure what he could offer that would help keep productions in Los Angeles besides offering some tax breaks.
Here in Pennsylvania, there is a new campaign to uncap the tax program. Over the past years the tax credit has gone up and down and it currently is capped at $60M. To note this year, Philadelphia landed at #7 on Movie Maker magazine's, 'Best Place to Live and Work as a MovieMaker in 2014.'
Film tax incentives are among a hot button topic right now as proponents detail how they work because they bring millions of dollars and jobs into areas and there are opponents who say they take away from other incentives programs and demonize the film tax program by using the phrase, ‘Hollywood Handout.’ Obviously not all films applying for the tax credit are Hollywood backed, the fact is when someone uses that phrase it does more harm to the independent film community if anything. In the end, each state is closely monitoring the ROI of the film tax credits not only of their state but of neighboring states. Interesting enough, some states without tax programs are getting creative, such as New Hampshire (they share and promote filmmakers crowdfunding campaigns), Delaware (promotes no sales tax) and South Dakota (no income tax).