Nevada’s legislature just narrowly defeated $1.4 billion in film tax credits to attract Sony and Warner Bros. studios. Some supporters of the bill called it “pro-business.” They weren’t technically wrong. It was very pro those specific businesses.

But that’s not the same thing as being pro-market. The fact this bill came within a few votes of passing reveals something important about how Nevada thinks about economic development.

We’re confusing activity with prosperity. 

What’s Really Meant by Pro-Business?

When politicians say they’re “pro-business,” it’s hard to tell what they mean. It likely means one of two things (and sometimes a mix of the two).

Pro-subsidy supported businesses: Supporting specific businesses through tax credits, incentives, and handouts. This is what the film tax credit represented: almost $100 million annually for 15 years to attract particular companies.

Pro-market: Creating conditions where any business can thrive. This can be by removing barriers, streamlining regulations, and reducing the cost of doing business across the board.

Nevada needs to be pro-market. The film tax credit vote shows we’re still tempted by the first even when the math clearly doesn’t work.

Activity vs. Prosperity

Here’s the deeper problem: Nevada keeps confusing economic activity with economic prosperity.

Activity is spending. Prosperity is wealth creation.

Activity is any job that exists whether it comes from sustainable businesses or if the government pays for them. Prosperity is based on jobs from profitable companies that don’t need government hand-outs.

Activity is measured by spending. Prosperity is measured by sustained income growth and rising living standards for residents.

The film tax credit would have created economic activity. That isn’t what’s up for debate. Productions would be filmed. Hotels may have been booked. Equipment would have been rented. Construction jobs would have temporarily been supported. All visible, all measurable, all easy to celebrate at ribbon-cutting ceremonies.

But activity isn’t prosperity if it costs more than it generates.

Subsidized Activity vs. Sustainable Prosperity

There are generally two paths to create private sector jobs in an economy.

Subsidized activity exists because the government pays companies to create it. Film productions would have happened in Nevada because we gave tax credits. When the credits expire or the industry contracts, that activity would likely disappear. 

Sustainable prosperity exists because companies can operate profitably without government support. They stay because the business fundamentals work. They have access to customers, an available workforce, reasonable costs, and competitive advantages.

Subsidized activity is a form of consumption. We spend tax revenue to essentially purchase employment. If the business isn’t sustainable, then when the subsidy ends, so does the activity.

Sustainable prosperity is different. It comes from companies risking their own capital when they see opportunity and then fill a market need. When markets shift, they adapt. They’re not dependent on the public’s continued willingness to subsidize them.

Nevada needs to stick to the second path. The film tax credit vote shows we’re still chasing the first.

What Sustainable Prosperity Requires

Creating sustainable prosperity doesn’t require subsidizing specific companies or projects. It requires removing the barriers that prevent markets from functioning efficiently.

When governments reduce occupational licensing requirements, they don’t pick which businesses succeed. Instead, they let more people compete to serve customers.

Prosperity comes from competition, not from the government choosing winners.

When governments streamline permitting and zoning processes, they don’t subsidize particular developments. Instead, they reduce the friction that makes all development more expensive and time-consuming.

Prosperity comes from lower costs and faster timelines that make more projects viable on their own merits.

When governments cut unnecessary regulations, they don’t pay companies to overcome bad rules. Instead, they remove the rules that made compliance expensive in the first place.

Prosperity comes from businesses spending resources on serving customers instead of navigating bureaucracy.

This is harder to celebrate than ribbon-cutting ceremonies for subsidized projects. But the prosperity is real. It shows up as:

• More businesses starting because barriers to entry are lower
• More people employed because companies can afford to hire without hand-outs
• Higher wages over time because productivity improvements aren’t absorbed by regulatory compliance costs
• Sustained growth driven by genuine market demand, not temporary subsidies

Trying to shortcut the market process with subsidies doesn’t create prosperity. It just creates activity that disappears when the subsidies end.

The Political Logic of Subsidies

So why does Nevada keep considering these deals despite the poor economics?

Because the political incentives favor activity over prosperity.

Subsidized projects have identifiable winners who lobby hard: companies that get tax credits, construction unions that build facilities, politicians who cut ribbons. The benefits are concentrated and visible.

The costs are spread out: taxpayers who fund the subsidies, alternative businesses that don’t get chosen, projects that don’t get built because scarce resources went elsewhere. These costs are spread across everyone and are difficult to see.

Bureaucrats get promoted for the estimated number of jobs closed by deals this year, not for the economic outcomes five years later. Legislators facing re-election want to point to specific job creation. They don’t want to focus on abstract improvements in the business climate. Voters tend to reward politicians who “bring jobs to Nevada,” not those who eliminate obscure licensing requirements.

This creates a bias toward subsidies even when the economics don’t work. Political justifications tend to overwhelm economic logic.

Understanding this helps explain why the film tax credit came so close to passing. It also explains why more proposals will keep popping up until Nevada changes how it thinks about economic development.

The Real Choice

Nevada’s near-miss with yet another hand-out focused bill reveals a choice between two visions of economic development.

Vision 1: Pro-Subsidy Activity

• Give Billions of dollars in subsidies to specific companies
• Hope they create the projected activity they claim
• Create dependency where their activity only lasts as long as subsidies do

Vision 2: Pro-Market Prosperity

• Remove regulatory obstacles that make Nevada less competitive
• Create sustainable jobs that don’t depend on continued subsidies
• Measure success by sustained income growth and rising living standards

The first vision requires billions of dollars. The second requires courage. We must tell politically connected businesses that helping their speculative projects pencil out isn’t the government’s job. Also, we need to tell voters that real prosperity often looks less flashy than subsidized activity.

What Nevada Should Learn

The legislators who supported the film tax credit bill wanted to create jobs and grow Nevada’s economy. Those are legitimate goals. The question is whether this approach would have achieved them. That’s not a story about one bad bill. It’s a story about how Nevada thinks about economic development.

We shouldn’t have to resort to paying businesses to come to Nevada. Especially not at an 80% loss. Not when that same $1.4 billion could go towards creating the environment that sustainable prosperity requires.

Pro-subsidy policies benefit the companies that get the handouts and create concentrated activity. Pro-market policies benefit everyone who wants to compete and create sustainable prosperity.

Subsidized activity only lasts as long as the subsidies. Sustainable prosperity lasts as long as the market demands it. Neither is guaranteed forever. But only sustainable prosperity allows growth to benefit taxpayers rather than come at a cost to them.

Nevada keeps choosing subsidies. We should choose markets instead.

Nevada’s Path to a Pro-Business Future

If you want to see how Nevada can lead the way in building a stronger, more business-friendly economy, take a few minutes to read our report, State Permissions vs. Market Possibilities. It breaks down how smart regulatory reforms can open the door for innovation, investment, and new jobs. Download it now and see how a pro-growth Nevada is entirely within reach.