A favorite Beltway talking point these days is that government spending juices growth more than tax breaks, which is why the stimulus legislation coursing through Congress has so much of the former. But it turns out that Democrats believe in tax incentives, too, at least for their political supporters.
National Journal reported this week that the Senate's economic stimulus bill includes a provision that would make Hollywood studios eligible for a special 50% write-off of equipment purchases. According to the report, "the provision is backed by firms like the Walt Disney Co., and the industry trade group the Motion Picture Association of America."
The House version of the stimulus already includes a bonus depreciation that lets businesses immediately write off 50% of their 2009 capital expenditures. But the Senate bill expands the definition of "qualifying property" -- specifically to include "certain motion picture film or videotape." Hollywood moguls like Steven Spielberg, David Geffen and George Lucas were among the biggest backers of President Obama's candidacy, and it looks as though Democrats have found a way to return the favor.
So let's see: Democrats object to cutting the U.S. 35% corporate tax rate -- which is higher than in all of Europe, undermines economic growth and discourages job creation -- for all companies on grounds that it favors the rich and powerful. But Democrats will carve out tax loopholes for businesses they like and that write them campaign checks.
There's also the little matter of how badly Hollywood is hurting vis a vis other industries -- or as liberals like to say, of "fairness." According to Variety, which covers show business, ticket sales for 2008 "clocked in at $9.63 billion, ahead of the $9.62 billion earned in 2007. Admissions were down roughly 4%, far less than declines in other sectors of the economy." Tinseltown already has enough stimulation.
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