The film industry nearly came to a screeching halt earlier this month. Almost 99 percent of the International Alliance of Theatrical Stage Employees’ (IATSE) members voted to go on strike to obtain more favorable labor terms. While this didn’t spark a walkout, it prompted frantic negotiations in which both parties reached a tentative agreement. This forestalled a strike, which some had predicted would be dire for Georgia, but would it really have been? To answer that, you need to know why the film industry is here in the first place.

Beginning in the early 2000s, Georgia began giving film producers deals if they filmed in Georgia. “The Georgia Entertainment Industry Investment Act grants an income tax credit of 20 percent to qualified productions,” reads the State of Georgia’s film brochure. Moreover, filmmakers can receive another 10 percent tax credit for doing something as simple as including the filmed in Georgia logo in the film credits.

Filming in Georgia subsequently boomed. In fiscal year 2020, Georgia led the nation in film production and looks to remain one of the top locations for the work, but this comes with a large price tag. According to the Georgia Budget and Policy Institute, the subsidies could cost the state over a billion dollars in the next fiscal year.

Despite this massive expense, supporters of film credits tout the program’s success, including calling Georgia the Hollywood of the South. “Tax credits have increased filming in Georgia, which is not surprising,” writes the Atlanta Journal Constitution. “If the state subsidized 30 percent of the cost of manufacturing toilets, Georgia would be the toilet capital of the world. The question is if there are better uses for [the lost tax revenue].”

In truth, I’d rather be known for films than toilets, but subsidizing deep-pocketed film corporations is problematic. While there are insufficient studies on Georgia’s film program, results from other states paint a bleak picture. The California government collected 65 centsFlorida 43 centsLouisiana 36 cents and Virginia around 20-30 cents for each dollar spent or lost to film subsidies—a horrible return on investment.

What is known about Georgia is that, as of February 2021, 88 percent of the companies that benefit from this program are from out-of-state, and the largest portion of the credits went toward out-of-state labor. So, how does this help Georgia?

The program purportedly encourages the film industry to spend billions of dollars in the Peach State, which some have insisted has an even larger economic impact. To determine how large, officials got creative. For every dollar filmmakers spend in Georgia, bean-counters simply multiply it by 3.57 and assert that this is the true economic impact dollar amount. As PolitiFact pointed out in 2015, officials have no earthly idea why they use this number.

While, in large part, the tax credits benefit out-of-state companies and out-of-state labor, films in Georgia provide some degree of economic stimulus. For instance, local caterers feed film crews, artisans help build sets and props and contractors fulfill various needs. Even so, the overall economic impact here in Georgia could very well be wildly overblown.

Because the film industry spends money here, an Axios Atlanta article warned “the economic hit [of an IATSE strike] would ripple throughout Georgia.” While there’s some truth in this statement, it really needs to be qualified.

Yes, a strike would hurt the local businesses and contractors that periodically provide support services to filmmakers. The entertainment industry, which is primarily domiciled out-of-state, would also suffer. But there are two sides to every coin. During a strike, a large number of films would be put on hold—meaning the state would presumably dole out fewer film tax subsidies, which is arguably a good thing, since they do not appear particularly beneficial.

To be clear, none of this is an indictment on the IATSE’s threat to strike, or unions for that matter. I have no problem with workers banding together—so long as it is done voluntarily—to negotiate for better working conditions. The IATSE sought better wages and longer breaks for its members, which seem like reasonable requests. However, the impact of such a strike—had it come to fruition—might only have had limited effects in Georgia, given that film companies employ a host of out-of-state workers and officials may have overstated the economic impact of films.

As someone who supports freer markets, I am naturally skeptical of business subsidies—especially when they arbitrarily benefit one industry over another. States should provide low taxes and a great business climate for everyone, which should be more than enough to encourage film production. Yet if the state is doggedly married to the idea of handing out subsidies, maybe it would be better to give the tax breaks to local businesses with local employees.