It is better to give than to receive?: The Live Theater Tax Credit

December 27, 2011

In a joyful press release, Broadway in Chicago recently announced that the Live Theatre Production Tax Credit had been passed by both houses of the Illinois legislature, and that Governor Quinn was expected to sign it.  Naturally the credit, "which applies only to long-run and pre-Broadway shows," is good news for Broadway in Chicago.  But is it good news for the theater community, or the city, as a whole?

Probably not.  To begin with, of course, tax breaks are relevant only to for-profit businesses, when the overwhelming majority of Chicago theaters are nonprofits (and nonprofits newly faced with city water bills, by the way).  Then, as is generally the case with tax breaks, a bunch of numbers are thrown around to justify the credit, with very few of them actually relevant to evaluating its cost or benefit.  In its press release, Broadway in Chicago estimates that "the addition of one year to a long-run show could generate an economic output to the city and state of over $500 million, attracting more than 800,000 people with more than 42% coming from out of the market, staying in area hotels and eating at local restaurants."  Great; but is the credit either necessary or sufficient to achieve that outcome?

Again, probably not.  Decisions about how long a touring or pre-Broadway production sits down in Chicago are based on how popular the show proves to be and on how soon it's judged ready for a Broadway venue (and vice-versa).  Neither of these factors is even faintly affected by the credit.  Sure, it will reduce the costs of operating a show--but that isn't an economic benefit (of $500 million or otherwise) to the city or state.  Rather, it's a cost--and a cost that remains carefully unspecified.

"The passage of any tax credit in these economic times takes both courage and foresight," observes the press release.  Yes, if for "courage" you substitute "gall" and for foresight, "blinders."  Money given to Broadway in Chicago--or the Chicago Mercantile Exchange, or Sears--comes out of the pockets of the rest of us.

Is this really what we meant by "a season of giving"?