Lights! Camera! Tax Credits! (Why Hawaii Needs To Give Rich People Money In A Bad Economy)

BY CHARLES MEMMINGER – I know. The economy sucks. Hawaii Gov. Neil Abercrombie just unveiled his state budget, which is a combination of raising taxes on everything from ice cubes to coconuts, and cutting programs like the “Foundation for the Preservation and Protection of Three-legged Geckos and Other Curious Island Creatures.”

So it would seem counter-intuitive or at least mildly insane to consider giving away state money to rich people in the form of investment tax credits. And for a free-market guy like me, I feel mildly insane for supporting such a scheme.

I’m talking about a proposal bouncing around in the state legislature to increase tax credits for film production in Hawaii – a proposal that has received world-wide attention because it is being heavily lobbied by celebrities like Bill Clinton, Dan Aykroyd and Cuba Gooding Jr. Why would these guys be interested in some tax legislation in little ol’ Hawaii?

The reason is they are connected with the film and TV industry, and that industry has had a raging love affair with Hawaii since “The Shark God,” was shot here in 1913.  Hollywood loves Hawaii but, alas, can’t afford to keep her in the manner to which she’s become accustomed.

Hawaii’s gorgeous, a real seductress. But, man, she’s expensive. And far away. While Hawaii legislators decide whether to sweeten the pot with tax credits to encourage Hollywood to come hither, other places like North Carolina and Michigan are making goo-goo eyes at Hollywood with tax breaks already in place.

You may think of North Carolina and Michigan as a couple of ugly sisters compared to Hawaii, but they have their charms. They’re cheap, which has always been a turn on for cash-strapped movie production suitors. And with the right makeup in the form of computer special effects, the movie “Pearl Harbor” could have been shot on Lake Huron and “Pirates of the Caribbean” could have been shot at Myrtle Beach. Or even in the Caribbean itself.

Because not only is Hawaii competing with U.S. spinster states, it’s also competing with even cheaper would be usurpers and temptresses like Canada, Mexico and  – the easily shocked might want to avert their eyes – China. Yes, I’m told that in China, there locations that look just like Waikiki Beach, Waipahu and Kahala Mall, though slightly smoggy.

Nevertheless, the steady procession of celebs and film production honchos like Relativity Media’s CEO Ryan Kavanaugh visiting the state capitol or sending in letters urging the tax credit bills be passed shows they are trying not to forsake the location they love.  Relativity Media (“The Social Network”) is even proposing to partner-up and build a state-of-the-art “green” film studio in Hawaii in return for the tax credits. (I’m not sure what a “green” production studio would look like, other than, well, green. Maybe stuntmen will fall from buildings onto recycled bubble-wrap instead of cardboard boxes.)

And this is where I have to embrace my mildly insane inclination to say “Hey, let’s give these rich guys tax credits!”

Why? Because it costs money to make money. The state tax office says the tax credits will constitute $46.3 million in “lost revenue.”

I argue with the term “lost.” Film production not only brings in millions into Hawaii but the productions are generally stunning video tourist promotions broadcast to snow-bound Mainlanders. The TV show “Lost” was nothing but dazzling location shots of the Islands made even more enchanting since nobody knew what the hell the story was about.

More than 10 million viewers (i.e. potential tourists)  per week tune in to the new “Hawaii Five-0.” And Five-0 crams more on-location shots in each episode showing off the beauty of Hawaii then any show on TV. You can’t pay for that kind of publicity. Well, you can. With tax credits, that kind of publicity costs about $46 million, which seems like a pretty good deal for advertising. (Five-0 charges about $135,000 PER 30-second commercial.)

(By way of disclosure I have to confess I’m unashamedly pro-film production in Hawaii, even if it means giving tax credits to the so-called “rich.” I was a staff writer on the final season of “Baywatch Hawaii” and writer on “From Hawaii, Destination Stardom” as well as having written a number of Hawaii-based pilots with comedian/actor Andy Bumatai and Baywatch co-producer and head writer Frank South. I have a great many friends in the film production biz and I hope to work with them again one day, perhaps on “The Lost Baywatch Magnum Waterworld Pirates From Here To Eternity” movie I hear is in development.)

Hawaii has had a film presence going back to “The Shark God” (and the even more awesome “She Gods of Shark Reef”) and that presence has been good for the state, both economically and culturally. Now is the time to feed the golden goose, not slay it.

Why give tax credits to the rich? Because the rich know how to make money and a rising tide lifts all wallets. Hawaii has always been ready for her close up and we can’t let that close up now go to the ugly stepsisters trying to turn film producers’ heads away from the islands.

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