There is little reason to expect a federal incentive to operate differently from state incentives, according to one expert.
The plan from President Donald Trump envisions public funds supporting Hollywood films produced on American soil.
The core of the proposal, revealed in a Truth Social post on Monday, is to establish a “Federal Production Incentive to create Entertainment Jobs in America.” Trump asserts that the tax break for Hollywood would “benefit ALL of America,” and that every dollar spent on incentives would be repaid many times over by funds flowing into the Treasury.
Funding film production through subsidies is not a novel concept. In 2024, The New York Times reported that states had distributed roughly $25 billion of taxpayer money to the movie industry over the last twenty years. Critics have long argued that these tax incentives for film and television are not a prudent use of public resources, and in several states they have yielded a net negative. In 2025, a review by the Maryland Department of Legislative Services found that, across a decade, tax credits granted to the film and television sector in eight states returned only between 3 cents and 31 cents for every dollar spent. In Georgia, Reason‘s Joe Lancaster found that the tax incentives granted to the film and TV industry yielded merely 19 cents per dollar. The few jobs created through the program cost the state about $160,000 each.
There is little reason to expect a federal program to behave differently from the existing state schemes, meaning it would involve substantial expense with only a small return in tax revenue,” Michael Thom, a professor at the University of Southern California, tells Reason. Thom adds that numerous studies demonstrate that “tax incentives for film and television production don’t create many new jobs.”
Trump’s push for additional subsidies not only disregards economic realities but also misreads why producers increasingly shoot abroad: labor costs. In 2024, 29 percent fewer features and TV series with budgets above $40 million were filmed in the U.S. than in 2022, according to The Wall Street Journal. Across the Atlantic, the United Kingdom saw a 16 percent rise in such productions. Even with Georgia offering a comparable tax credit, more studios are opting to shoot in the U.K. because “workers there are generally paid less, and studios aren’t obliged to provide health insurance,” the Journal notes.
High-priced union agreements also weigh into the calculations. In 2023, members of SAG-AFTRA, the largest Hollywood union, went on strike for four months before accepting a new contract that included $1 billion in fresh compensation and benefits for union members, and imposed restrictions on AI use in production.
Two years after the strike, an NPR report indicated that “production never returned to pre-strike levels as streamers ordered plentiful content.” In July, FilmLA Research found that “tax incentives for film and television productions have not been enough to counter a still-sluggish environment for filming in the greater Los Angeles region.” According to Thom, the broader decline in employment in the industry nationwide “dates back to the SAG-AFTRA strike and the subsequent contract.”
If producing in the United States demands an exorbitant production budget—driven largely by labor costs—studios will seek other locations that boost their margins.
With the rise of streaming platforms and user-generated content, a rebound appears unlikely in the near term. “Americans are increasingly spending their time streaming already produced content or watching user-generated videos on YouTube and TikTok instead of watching films on network or cable television,” Thom wrote in a policy brief for the Mackinac Center earlier this year.
Americans aren’t facing a shortage of material, and studios don’t require taxpayer funds to produce quality cinema. Trump’s proposal to expand subsidies for the film and television industry seems like a remedy looking for a problem. Viewers don’t particularly care whether a production was created in the United States or in Britain; their primary aim is to be entertained.
