Newsom announces new tax credits that benefit Hollywood's biggest studios, at taxpayer expense

The latest round of film and TV tax credits were awarded to 35 new film and TV projects, Gov. Gavin Newsom’s office announced Wednesday, despite critics saying that the credits benefit the major studios at the expense of California’s taxpayers.

A sequel to this year’s Michael Jackson biopic, tentatively named "Michael 2," is one of the projects to benefit from the latest round of state film and TV tax credits, Newsom’s office announced.

“We’re making sure independent filmmakers and the next generation of storytellers and creators have a real shot to build, hire, and produce right here in California,” Newsom said in a press release announcing the latest tax credits. “More productions, more good jobs, more California stories told by California workers.”

Newsom’s office did not respond to The Center Square's request for further comment before publication time on Wednesday.

Other movie and TV projects that are getting tax credits include “Last Friday” from New Line Cinema, “Leaves of Glass” from Pinstripes Studios, an untitled Paramount Pictures crime thriller and an untitled Mike Mills film, the governor’s office announced.

The latest round of tax credits announced this week for film and TV projects will bring $1.08 billion in production spending to the state, paying for 5,453 jobs for cast and crew members, 24,842 backup performers, and 1,049 shooting days in the state, the governor’s office said. Since July 2025, the state’s tax credit program to spur film and TV production has brought $7.2 billion in production spending to the state.

“I think the film and TV industry is so important to our local economy and our local welfare,” said David Offenberg, associate professor of finance at Loyola Marymount University, a Catholic institution in Los Angeles.

“So many of L.A.’s residents have an income tied to the film and TV economy, and more broadly the entertainment industry, so I think keeping those jobs here is important for our economy and our identity," Offenberg told The Center Square on Wednesday.

Other states and countries stole those jobs for years, Offenberg said, because California didn’t prioritize keeping those jobs in the state.

“We’ve seen the effects of not prioritizing it in how many jobs we’ve lost in the economy, how much production we’ve lost and how much stature we’ve lost,” Offenberg said.

According to a Legislative Analyst’s Office report published in February 2025, disruptions to film and TV production in recent years have spurred many production companies to shift production and operations to other parts of the country, or even other countries. The COVID-19 pandemic and entertainment industry strikes contributed to a decline in production activity in California, prompting Newsom to propose increasing the cap on the tax credits from $330 million to $750 million in the 2025-26 fiscal year, which ultimately passed. The Legislative Analyst’s Office wrote in that report that increasing the limit on the number of tax credits that could be awarded would prompt more production to take place in the state.

Despite the advantages many have touted in expanding the tax credit, critics said that the credits effectively result in California’s taxpayers subsidizing film and TV show production in the state.

“This is an admission that California’s environment is uncompetitive, and you have to basically buy it down,” Wayne Winegarden, an economist at the Pacific Research Institute, told The Center Square on Wednesday. “If it was competitive, you wouldn’t have to. They would voluntarily set up shop here.”

The accounting documenting the jobs and economic activity created by the tax credits is relatively one-sided, Winegarden said.

“In order for the state to spend this money, they had to take it from somebody else,” Winegarden said. “Growth comes when resources are used at their best, and we’re going to have a better chance of spending money wisely when lots of people have the opportunity to allocate it as they see fit rather than essentially planning out of Sacramento.”

Despite 28 independent projects receiving part of the latest round of tax credits, Schuyler Moore, a partner at Los Angeles-based law firm Greenberg Glusker, told The Center Square that he sees the tax credits benefiting big studios more than independent filmmakers.

“That whole credit is designed to help the studios, so the short answer is the rich get richer,” Moore, who practices entertainment law at Greenberg Glusker, said. “It doesn’t really work for the independent film companies, so the truth is studios would have produced here anyway, probably. So in my humble opinion, all it is is a giveaway from California that increases the tax rate to everybody else, which is why everybody’s leaving.”

Colleen Bell, director of the California Film Commission, did not respond to The Center Square's request for comment on Wednesday.