State film subsidies lose money. Trump wants to try the idea nationally.

President Donald Trump wants taxpayers to pay Hollywood to make movies in America. 

The crux of the president’s idea, announced in a Truth Social post on Monday, is to create a “Federal Production Incentive to create Entertainment Jobs in America.” Trump claims the tax break for Hollywood would “benefit ALL of America,” and that any money “spent on Tax Incentives will be made up tenfold by the money pouring into the Treasury’s coffers.”

Subsidizing movie production is not a new idea. In 2024, The New York Times reported that states had doled out $25 billion in taxpayer money to the film industry in the past two decades. These tax incentives for the film and television industry have not been a wise use of public money, and in several states they have been a net negative. In 2025, a review by the Maryland Department of Legislative Services found that, over a decade, tax credits provided to the film and TV industry in eight states returned between 3 cents and 31 cents for every dollar. In Georgia, Reason‘s Joe Lancaster found that the tax incentives offered to the film and TV industry created just 19 cents for each dollar spent. The few jobs that were created through the program cost the state $160,000 each. 

There’s “no reason to think a federal incentive would work any differently from state incentives, meaning that it would cost a lot of money and generate very little tax revenue in return,” Michael Thom, a professor at the University of Southern California, tells Reason. Thom adds that countless studies show that “tax incentives for film and television production don’t create many new jobs.” 

Trump’s call to further subsidize the industry not only ignores economics, but also misdiagnoses why producers are increasingly choosing to film overseas: labor costs. In 2024, 29 percent fewer movies and TV series with budgets above $40 million were shot in the U.S. than were in 2022, according to The Wall Street Journal. In the U.K., 16 percent more movies and TV series with budgets above $40 million were shot. Even though Georgia offers a similar tax credit, more studios are choosing to film in the U.K. because “workers there are generally paid less, and studios don’t have to cover their health insurance,” per the Journal. 

Expensive union deals are also part of the calculus. In 2023, members of the Screen Actors Guild–American Federation of Television and Radio Artists (SAG-AFTRA), the largest Hollywood union, went on strike for four months before agreeing to a new contract that included $1 billion in new compensation and benefit funding for union members, and restrictions on the use of AI in production. 

Two years after the strike, an NPR report showed “production never returned to pre-strike levels when streamers were ordering lots of content.” In July, a report by 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 recent nationwide decline in employment in the industry “dates back to the SAG-AFTRA strike and the new contract that followed.”

If shooting in America requires an extravagant production budget—largely driven by labor costs—studios will opt for other locations that improve their margins. 

With the advent of streaming channels and user-generated content, it’s difficult to see a bounceback on the horizon. “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 suffering from a dearth of available content, and studios don’t need taxpayer money to make good movies. Trump’s proposal to further subsidize the film and TV industry is a solution in search of a problem. Viewers don’t care if what they’re watching was made in the U.S. or the U.K.; they just want to be entertained.