Compromise Reached, July 7, 2021
I intend to support the compromise resolution of the controversy about the film tax credit. It is time to put this issue to rest.
The elements of the compromise are:
- Elimination of the sunset — making the credit permanent, while preserving its transferability.
- Increasing the Massachusetts required share of production expenses from 50% to 75%.
To understand the second element of the compromise, it is necessary to get into the weeds: The film tax credit has two main parts. The 25% credit for Massachusetts payroll and the 25% credit for Massachusetts production expenses. Payroll is a subset of production expenses. Of course, one cannot get double credit for payroll expenses, but payroll expenses that are not eligible for the payroll credit may still be eligible for the production expense credit.
The compromise tightens the eligibility rule for the credit for production expenses by changing the required Massachusetts share of expenses from 50 to 75%. This 75% rule does not apply to the credit for payroll in Massachusetts.
The payroll credit is currently not available for people paid over $1,000,000, but the payroll of these “stars” can be eligible for the production expense credit. This does not change, but the star payroll credit is now limited in its availability to those films that are 75% made in Massachusetts, as opposed to 50%.
Over the past 90 days, more constituents have contacted me about the film tax credit than about any other issue. The credit will sunset in January 2023 if we do not vote to extend it or make it permanent. Some kind of change is likely to be made as part of the state budget bill that is currently under debate.
Since arriving in the legislature in 2007, I have opposed the credit, while all constituents contacting me about it have urged me to support it. It is time to offer an updated explanation of my views on the issue.
The film tax credit is a form of extortion by the U.S. film industry. Because most films can be shot or edited in more than one location, the film industry can play locations off against each other, taking their work to the state offering the best incentives and threatening to leave the minute another state makes a better offer.
Instead of simply choosing the best and most cost-effective locations, the industry has invested heavily in lobbying, seeking to extract concessions from state governments at the expense of taxpayers who have little awareness of the intense persuasion campaign underway and little opportunity to offer a contrary view.
Massachusetts adopted its film tax credit in 2006 during a period when many states were competing with each other in a lobbyist-fueled frenzy to attract film business. The high water mark of the film tax credit was 2009 when 44 states offered film tax incentives. Since then, many other states have backed away and by 2018 only 31 still offered film incentives, according to the National Conference of State Legislatures.
Constituents who contact me generally work in an occupation that supports film production. They report, and I do not doubt, that their jobs depend on the film tax credit. Roughly 80% of the credits go to feature films, many of which could and would be shot elsewhere if Massachusetts did not offer a generous credit.
It is worth understanding just how generous the film tax credit is. The credit is computed as 25 per cent of amounts spent in Massachusetts. So, if a film brings in a movie star and pays them $1 million for their time shooting on location in Massachusetts, then Massachusetts effectively pays $250,000 for the movie star’s salary. The “credit” is often much greater than the production company’s tax liability and it may be sold to another taxpayer or redeemed for cash.
This level of credit is just not fair to other industries. Many other industries receive tax incentives, but none of the various incentives is as generous as the film tax credit. If Massachusetts were willing to pay 25% of the costs of any other particular industry, Massachusetts could likely become the world leader for that industry.
But the state could not possibly afford to do that for other industries. The film tax credit, which serves a high visibility but relatively small industry, cost over $600 million in its first 10 years of existence (from 2006 to 2015) and could be up to $1 billion by now. It is a very substantial investment.
The industry often points out that their spending creates jobs and supports local businesses. When the industry brings in a crew they patronize local restaurants, for example. But the majority of the benefits of the spending goes to out of state residents just passing through to produce a film.
Estimation of the full economic impact of a feature film requires econometric modeling, which always requires some guesswork, even when done by the finest professionals. While the modeling is imperfect, the studies we can find (see resources below) indicate that the net taxpayer cost per full time equivalent job created for Massachusetts residents is very high, likely over $100,000 per year. Not that people are getting paid that much. That $100,000 number is the net tax expenditure divided by the number of full-time equivalent jobs created. Many of those jobs pay much less.
Understanding net state cost per job
The Department of Revenue (based on the 2015 DOR link below) computes the net state cost per job created as follows. The numbers in parentheses are averages for the period 2006 through 2015. The net state cost is the total credits paid (approximately $60 million per year) offset by new tax revenue generated by the film production spending (approximately $9 million per year), including taxes on spinoff/multiplier activities. The count of jobs created consists of all direct jobs created by film production for Massachusetts residents (variable, approximately 500 full time equivalents per year) plus spinoff/multiplier jobs created by film production and minus spinoff/multiplier jobs which would be created by the average state spending program which might have been undertaken if we were not reducing revenue through the credit. The spinoff/multiplier jobs for film production are roughly 600 full time equivalents per year and are slightly more than offset by the loss of spinoff/multiplier jobs by other state spending. Dividing the net state cost of approximately $51 million per year by the net job creation of approximately 500 full time equivalents, one gets approximately $100,000 per job. This is the right number to use compare to other state spending options. Indirect/spinoff jobs are computed using a dynamic model of the Massachusetts economy developed by Regional Economic Models Incorporated.
With net expenditure per job that high, there are many more direct ways to create jobs, jobs which might be more equitably distributed and which might provide more direct benefits to Massachusetts residents. If we just want to attract business, we would do better to consider broad-based incentives that apply to the full range of businesses considering location decisions in Massachusetts.
Overall, the appeal of the film industry to legislators is great enough that notwithstanding objections like mine, many support the credit. Over the next few weeks some form of compromise is likely to emerge.
Resources on Impact in Massachusetts
Resources and summary bullets assembled by Alicia Brisson.
Department of Revenue Overview of Film Tax Credit in Massachusetts.
Department of Revenue Report on Impact of Film Tax Credit through Calendar Year 2015:
- Calendar year 2015 had $272.5M in tax credits claimed, with DOR estimating that $9.6M in spending would have occurred without the film credits. Of the remaining $262.9M, $112.3M (43%) went to MA residents/businesses, while $150.5M (57%) went to out of state residents/businesses.
- From 2006 to 2015, one net new MA-resident job was created per every $102,888 spent in film tax incentives, and one non-MA-resident job was created for every $65,404 spent in film tax incentives.
- Of the $619.3M in film credits from 2006-2015, $531.4M were sold directly to other MA taxpayers or to tax credit brokers. Film producers received $467.8M in sales, while $10.1M was gross profit of tax credit brokers and an additional $52.5M benefits other MA taxpayers in the form of reduced net tax payments to MA
Department of Revenue Report on Impact of Film Tax Credit through Calendar Year 2016:
- For calendar year 2016, tax credit spending totaled $182.6M, with DOR estimating that $11.1M in spending would have occurred even without film tax credits
- Of $171.5M of new 2016 spending attributable to tax incentives, $83.4M (49%) paid to MA residents/businesses, while $88.1M (51%) paid to non-residents or businesses located outside of MA
- From 2006-2016, one net new MA-resident job was created for every $102,370 spent in film tax incentives
Pioneer Institute: For FY19, film tax credit cost state $80M in lost revenue. MA film tax credit does not effectively attract businesses to MA, create lasting employment, or simulate the economy.
Tax Foundation: 2014 study found that from 2006 to 2012, Commonwealth offered $411M in film tax credits, which only created 3,000 jobs to state residents at cost of $109,000/job, most of which were temporary, lasting less than 3 months. In 2012, MA gave $78.9M in tax credits, which cost the state $100.6M and only generated $10.6M in new state revenue, meaning that the state lost $68.3M in revenue.
MassBudget: 2015 study found that film tax credit cost MA $80M for both FY15 and FY16. For every dollar of tax revenue given away by film tax credit, the credit only delivers 13 cents of new revenue for the Commonwealth. Almost 2/3 of the film tax credit net wages went to non-residents ($394M) than residents ($213M) from 2006 to 2012.
Mass Taxpayers Foundation: 2015 Testimony offered by Eileen McAnneny, the president of the Massachusetts Taxpayers Foundation, favored eliminated the MA film tax credit due to its high cost per job created, and instead advocating that this state money be spent on EITC.
Tax Expenditure Review Commission: The Massachusetts Tax Expenditure Review Commission reviews each tax expenditure every 5 years to evaluate its purpose, intent, goal, and effectiveness. Its 2021 report found that (pg 86-87):
- “The TERC somewhat agrees that this credit provides a meaningful incentive as it returns 25% of the filer’s spending, whether that is $25,000 on $100,000 for a commercial or $25 million on $100 million in spending for a feature film. We somewhat disagree that it benefits smaller businesses or is relevant today. We also somewhat disagree that it is claimed by its intended beneficiaries, as nearly 90% of the credits are transferred. We strongly disagree that it benefits lower income taxpayers or that it is claimed by a broad group of filers. We are between “somewhat” and “strongly” disagreeing that it justifies its fiscal cost. The TERC notes that, by its nature, this credit produces immediate and measurable spending within the Massachusetts economy. This can be contrasted with, for example, an investment credit. Unlike the film credit, an investment credit would have little immediate impact; however, where an investment credit contributes to long-term capital formation, the Film credit has had no discernable impact beyond its one-time spending. Further, much of the initial spending that qualifies for the Film credit occurs outside of Massachusetts, providing no benefit at all. The result is that, while the film credit provides some immediate stimulus, it does not contribute to the long run growth of the state’s economy. Even though we are able to measure in detail all of the economic benefits of this credit, it still results in a cost of $100,000 per job created. We conclude that this is not the best use of the state’s money”.
Resources for State Film Tax Credit Impact Broadly
Chart of film tax incentive (or lack thereof) in each state.
NSCL Report found that fewer states offer film tax incentives or have tightened restrictions on film tax incentives than in 2009.
- In 2009, 44 states offered some form of film tax incentive, but that number has dropped to 31 states in 2018, with other states tightening these tax incentives
- Wyoming and West Virginia eliminated their tax credits in 2018
- Colorado, Maryland, and Texas reduced annual appropriations available in film tax credit for FY18; Oklahoma decreased annual program cap from $5M to $4M; Louisiana also introduced program cap at $150M
Atlanta Journal Constitution: 2020 study found that because Georgia film tax credits are transferrable and most productions don’t owe taxes, they sell tax credits to other Georgia taxpayers, which they use as vouchers to cover own tax liabilities. In Georgia, the tax credit costs $230 per Georgia household, which is 3% of the state-funded budget. Studies have also found that most jobs created are temporary and given to out-of-state workers, namely from Hollywood.
Pioneer Institute: Film tax credits create predominately short term jobs, and the majority of this money ends up in out of state movie star pockets, not into local businesses or state revenue.
Tax Foundation: 2016 study found that in California, $1 of every $3 in tax incentives went to projects that would have been filmed regardless of if state awarded tax incentive to the film production or not.
I still support the incentive! It means something intangible that movies are made here. It’s worth it!
I also support the tax credits. It is not extortion from the film industry but competition. And films by nature are temporary and only last about 3 months. Having a healthy production industry provides a creative pool of talent in Massachusetts and helps the image and tourism for the state. Maybe you can consider some restrictions on the salaries of non MA resident talent? Otherwise, please reconsider the bill.
I agree with you Will. We should not be competing in a “race to the bottom.”
It would have been great to have been able to use that $600 million on the T rather than buying 2nd homes for a bunch of overpaid movie stars and funding Harvey Weinstein’s legal defense. Get rid of it!
I can only assume this is a joke… If you have ever been on a film set, you would see its mostly local craft people, blue-collar middle-class family people local to Massachusetts, driving trucks, building the sets, feeding everyone, local police detail and so all. We all live here in the commonwealth and we all would like to continue living here. The tax incentive is critical to our livelihood.
Well, I don’t think these comments or positions are a “joke”.
However, I agree that many locals do get work when productions are in town. Shoots bring interest and excitement to town.
Will, you’re right. The film tax credit is a terrible deal for Massachusetts. Like subsidies to build ballparks, it should be ended and I hope it will.
I agree with you completely. The plus is a feel good effect of seeing places you recognize (sometimes) in a movie. The minus is real dollars.
Thank you for your thoughtful explanation!
I fail to see any solid reason for a tax credit… What do we really gain?
Jobs for people who would get similar work elsewhere?
Boston location ‘in lights’ when the credits roll. Does this increase our tourist numbers??
Lots of disruption and inconvenience for those of us who live here – what do we get paid for that?
Hey there. As someone who works in the industry and on these film sets, I understand it’s difficult to understand but the people that work on these movies live in Massachusetts. Saying I can get similar work elsewhere is like telling a general contractor that they can work anywhere. While this is technically true… that would mean moving their entire family and uprooting them from their homes. Almost 90 percent of us grew up in new england and most of us live in massheschusettes (me included). The tax incentive is integral to our livelyhood. Thousands of blue collar middle class workers depend on the incentives. Its not all “Hollywood” and highpaid stars. Its local truck drivers, police detail, carpenters, electricians, caterers and so on that make up the bulk of what you see.
Doesn’t this logic apply to every industry though? Everything you said applies equally well to welders, landscapers, painters, architects … we could offer any of there industries a 25% tax incentive and really help them out, employ more of them.
Actually it doesn’t apply to every industry. Welders, landscapers, painters, and architects need things to weld, landscape, paint, and architect. Subsidizing those industries won’t increase the demand for their services. There’s a relatively finite amount of work for them to do. If you want to increase the number of jobs, and the tax revenue created by them, you need to subsidize businesses that need their services.
Which is exactly what this tax credit does. It brings films to the Commonwealth, which increases demand for carpenters, truck drivers, electricians, etc. This creates more jobs which increases tax revenue. This increase in tax revenue can be put toward funding things like public transit.
The other thing that needs to be considered is not how much is saved but how much is lost. Sure, you might save $600M a year for those 10 years but you’ll lose approximately +5000 jobs (assuming there’s still a demand for some of the carpenters, electricians, etc. ). How much lost tax revenue is that over that same period. Keeping in mind that if people leave the state to follow their job, that’s not just a loss of income tax revenue, but sales tax, property tax, and whatever consumption tax revenues they contribute to.
Production companies come in from outside the area and hire locals to do the work. The trades mentioned above are simply based here, without productions coming in from outside. In fact, some of those trades mentioned above could be hired to do work by production companies to create sets and locations.
Not really, I think. Production companies come in from outside the area and hire locals to do the work. The trades mentioned above are simply based here, without productions coming in from outside. In fact, some of those trades mentioned above could be hired to do work by production companies to create sets and locations.
Glenda, the film tax credits do indeed increase tourism and the spending that comes with it. There is a reason why the MA Film Office is part of the Office of Travel & Tourism. The head of that office readily admits that they would need an advertising budget in excess of $600 million dollars to mount a world-wide advertising campaign for the state equal to what the state has received from the films that have shot here because of the tax credits. The Cape benefits by, and will continue to benefit for years by, the exposure it received in The Finest Hours. The city of Boston continues to benefit by the love poem to the city and the Red Sox’s that is Fever Pitch. Salem will benefit for years by the exposure it received in last year’s Adam Sandler Halloween movie Hubie Halloween. And the state couldn’t buy for all the money in its operating budget the kind of branding Boston and the Marathon received in Patriot’s Day to name just a few of the films shot here.
The economic analysis that Senator Brownsberger cites does not take into account a tourism “multiplier.” Take into account the increase in tourism spending as a consequence of the films shot here and the cost per job created comes way down. If anyone doubts the power of the tourism “multiplier” of a successful TV show or movie, they need only watch the tourists flocking into the Cheers themed bar at 84 Beacon St. That show went off the air in 1993, yet by recent estimates the annual number of tourists patronizing Boston’s two Cheers-themed bars to be about 750,000. One can’t begin to calculate in dollars the benefit Boston will receive if the upcoming Whitney Houston bio-pic to be shot this fall will have if it becomes a world-wide hit.
According to a recent report from the Consumer Technology Association, streaming services alone are projected to spend $112 billion on new production in the next six months to replenish their inventory depleted by the 40% increase in viewership during the pandemic lockdown. If the state wants a piece of that pie and the tourism dollars that follow it, it should retain its film tax credits as they are.
The House voted unanimously, 160-0, to retain the film tax credits as they are. 23 out of 102 State Senators co-sponsored an earlier bill in the Senate to remove the sunset of the program in 2023. Senator Brownsberger is in the minority on this issue. The overwhelming majority of the House and Senate approve of retaining the film incentive program as is.
I agree with Guy.
Thank you for taking a principled stand on this particular matter. I have always understood that film tax credits cost the state far more than they produce. I want Massachusetts to be a business-friendly state, but that is hardly the same thing as providing corporate welfare. We need a level playing field, with clear, rational regulation (neither confusing nor over-bearing).
Will…i’m stunned…i’m TOTALLY with you on this one. Fear you will get rolled by the criminals and grifters so thick around you, but you got this one right. Let those phonies and grifters pay their taxes. Surcharge their Gulfstreams for all the C02 emissions. Good on ya’ man.
Excellent analysis and correct decision. Concentrated benefits, in this case benefits to the film industry, attract vocal supporters, while the costs are distributed widely among us taxpayers who don’t have the incentives to fight back.
I’m fine with films in Canada pretending to be Boston. And Brits with forced accents
Get rid of this monkey on our backs please.
I agree with you Will. Your research has been thorough and I don’t think it is in our best interest to continue to offer this subsidy to a single niche industry.
I support your position. I am appalled by states competing by giveaways. Is there an effort to get states to uniformly reject such giveaways? I felt cheated by the G.E. giveaway.
It’s a perennial problem that is interwoven with all of the politics of the country. There are efforts as you suggest, but it’s like many other tough issues — it doesn’t get finally resolved.
Will – you are right to oppose this, and also to critically evaluate the gains in terms of net jobs created. The subsidy recipients often play games with estimating the job creation benefits, using aggressive multipliers on spillover spending from a particular project, and masking that many of the jobs they are claiming aren’t full time, well paying, or permanent. It’s too bad that states can’t band together to resist giving away these tax credits. Under the present system, the more states bid against each other, the less incremental gain to the state net of the subsidies is left.
With the MA film tax credit in particular, it can be earned not just on blockbuster movies, but even on commercials and other films produced by and for large companies. One good thing is that the MA DOR publishes a really good transparency report on targeted tax credits like this one, showing the specific recipient and the amounts granted each year. You can review the Transparency Report for 2019 here:
Search “film” to find the film credits. It is fun, albeit somewhat depressing reading, for anybody interested in good government and efficient allocation of resources. There’s an excel version of this online as well in case anybody wants to run groupings by industry, claimant, etc.
Thank you, Doug. Helpful link.
A friend of mine who was a producer for NBC Universal told me that the tax credit is most important when filming a series. It isn’t such a big consideration for full-length movies.
Thank you so much for that wonderful explanation. Understanding the issue as I now do, I wholeheartedly support your position.
Very thoughtful explanation. Thank you. I have no real position on this question. Reading yours leaves me thinking it really is too costly and not effective in job creation. While it may be nice to occasionally see MA or Boston on the big screen, and that “might” bring in tourists, or business eventually during the films runs on screens, streaming, DVD’s, etc. I do not doubt the money costing tax payers might be spent better elsewhere.
I agree with your logic completely.
Thinking about the fact that Amazon just bought MGM, I would be sick to my stomach if Massachusetts was doing anything to subsidize their excessively profitable (and, in other areas, highly monopolistic) business.
I agree Will. Let’s find more sustainable jobs that do not require so much of the Commonwealth’s money. The film industry is one of the more glamorous industries and exciting to have locate in Boston. That said, we have enough glamour without them.
Will, I agree with you. We could use that money for much better things than bragging right about a film being made here.
I agree with your position. Feature films can generate big money for the actors, directors, etc., and I see no reason for us to absorb a portion of the expenses.
I didn’t know much about this and I’m really glad to have learned more! This does seem to be an excessive subsidy, at the very least.
Thank you very much, Will, for your thorough explanation of the costs and benefits, and the attachment and links you included. Fact-based and sound argument – thank you for the education, you’ve changed my “vote”.
I agree with you Will. The research is mind blowing.
Most of these production companies are owned by very wealthy individuals/corporations.
It is a bit crazy to supplement their and actors million dollar incomes while we have essential workers on food stamps!
With so little financial and economic benefit to Massachusetts, I definitely agree with your position on this, Will.
The movie industry is oriented to their bottom line, period. Of course, that is as it should be, but that industry has done way too much of participating in the negative view of the United States in general, and contributed to the moral decline/decay and if you want proof, take a look at the movies produced in the 1940-1950’s era for comparison. Oh, I see, too patriotic. Really.
Will, continue to march, I support your viewpoint in its entirety.
I have to agree with Will’s position and his non-support. Setting aside emotion and pride for our state, rationally these tax credits are not justifiable from a fiscal or financial perspective as reflected by some of the data offered above. If this is only about jobs there need to be other solutions devised. And the film industry will want a presence here in the end.
I completely agree with these thoughtful points against the credit
I support your decision to oppose the MA film tax credit.
It doesn’t appear to benefit the tax payer or industry worker.
Thank you, thank you, thank you for opposing the MA Film Tax Subsidy. There are so many higher-priority public projects that need funding, as opposed to this subsidy.
Excellent presentation of a complex subject. Thank you. That said, I don’t believe in an “either/or” world (except for COVID vaccinations 🙂 ). I have no connection to the film or tv production industries, but isn’t there some middle ground here that would make the tax concessions less generous while providing some benefit to production companies? Maybe an impossible dream of sorts.
There are a lot of possible dimension for compromise.
Big fan here, Will, from outside your district. I spoke with my Senator’s office about this in 2019 and was told “we’re getting lots of calls from supporters who are well organized”. This is a standard response; my elected official abdicates responsibility for analysis and good governance and simply says “I’m getting lots of calls from the other side”.
Thank you for being an elected official with integrity who engages citizens, listens, leads and works for just and sustainable policies.
Thanks Will for your thoughtful analysis and I agree that this is not a worthwhile expenditure for reasons articulated by you, many constituents and the think tanks listed. Producers do need tax breaks to come to MA and if they do, go can go elsewhere.
Thank you for your courageous position. As an economist, I know that studies of these credits in several states have repeatedly documented how the subsidy dollars given to the industry far outweigh any increased revenue from associated activity. In other words these subsidies are a sure bet net loser for the State.
You should also be congratulated the thoughtful explanation you provided. You have encapsulated many of the loopholes and sleights of hands used by the industry to milk these tax breaks.
Thanks for the detailed analysis. I’ve always believed the current tax credit was too generous.
Thank you for your courageous position. As an economist, I know that studies of these credits in several states have repeatedly documented how the subsidy dollars given to the industry far outweigh any increased revenue from associated activity. In other words these subsidies are a sure bet net loser for the State.
You should also be congratulated for the thoughtful explanation you provided. You have encapsulated many of the loopholes and sleights of hands used by the industry to milk these tax breaks.
Great explanation! I support your research and believe these overgenerous tax credits should sunset. People will still want to film in Boston and Massachusetts because:
Matt Damon and Ben Affleck need Southie, Back Bay is cheaper than NYC for period dramas, and Ryan Reynolds likes to eat in the SouthEnd.
I take issue with the negative characterization of ‘short term jobs’. This means supporting free-lancers and gig workers. There are many who do short term work, not just media production people. I’m thinking of my dad going from site to site as a carpenter. Traditional jobs are on the way out, and we need to increase support for gig workers.
The credit may not be the most efficient way to do that.
With regard to the credit, I think a modest compromise is wise. Provide enough incentive that we are considered when productions are being sited, but reduce the size of the subsidy substantially.
Personally, I can’t get behind the argument that we are subsidizing non-massachusetts residents, that is just a bit of jealousy that does not belong in the analysis. That has nothing to do with whether it benefits us.
Consider this: If we offer no tax credit, and there is no local movie production, our tax revenue is not improved over a scenario where we offer the credit and have a local production.
Can you show the math for this assertion? If the state collects (say) another million dollars in revenue (from income taxes on wages, meals taxes, etc.) by giving a production ten million dollars in tax credits that other people use to reduce the taxes they pay, ISTM we’re down nine million.
Will, I agree. Phasing it out over 5 years should be fair to anyone who claims they made investments or have work based on the credit.
Easy for you to say. I’m guessing you don’t have millions of dollars invested into a business that services the film industry. And lots of employees who’s families rely on the film industry. It’s either close our doors or move to a state that is film friendly. I’m one of many Mass based businesses in this predicament right now.
Thank you for this very cogent analysis about which I knew very little. I find your argument extremely persuasive, and I completely agree with you. Sure, it’s always a thrill to see our city in a movie, but I had no idea the extent to which we are subsidizing such extravagant expenditures out of taxpayer funds.
So, here’s a note to change the imbalance of feedback you have been getting on Film Tax Credit. (And by the way, thank you for your post)
I fully support your opposition to the film tax credit. Not only is it not fair to other industries, it’s not fair to Massachsuetts tax payers.
That we pay 25% of a movie star’s obscene contract fee is unacceptable. And, temporary jobs are just that, short-lived and should not be subsidized by the tax payers.
The information you present makes it quite clear that the film tax credit is not a good way to spend MA tax payers’ money.
Thank you for your work and we support your opposition to the credit.
I think this tax credit doesn’t help Massachusetts residents enough. The benefit isn’t strong enough to keep it.
I just wanted to reply and let you know that I, too, oppose the film tax credit in its current form, as well as most forms of this kind of race-to-the-bottom interstate corporate subsidy competition. You likely haven’t heard from constituents who agree with you because it’s just a pretty low-salience issue for people whose only connection to it is as a taxpayer, but we’re out here!
The best way to handle this would be weighing the $amount of tax revenue lost from the credit v.s. the amount of added jobs who pay taxe$ that didn’t exist without it, minus the cost burden of those in the industry bring to the state. I personally don’t think it will balance (fuzzy logic) to the revenue side.
It is not like the restaurant industry where the meals tax comes off the top of the gross sales(your meals bill) and therefore is lucrative for the state to bring back this industry.
That is the kind of analysis that the DOR reports do in a pretty sophisticated way.
I would like that logic be applied to who pays for and who benefits from public primary education. It seems to be dumped on the local property tax payers without consideration of who is carrying the burden
“Massachusetts effectively pays $2.5 million for the movie star’s salary.” Hmmm, I might be the first to sneer if a Fidelity exec. made the argument I’m about to, but MA is not paying anything, right? It’s forgoing hypothetical tax revenue. If the films or shows aren’t made here then there is in fact no lost tax revenue cause they didn’t do the work here (or remotely from New Hampshire ;). Am I missing something?
I don’t disagree with your general point in terms of fairness or worthwhileness. If my best friend’s boyfriend wasn’t an actor I wouldn’t care, but, sound though your reasoning is, I could see your action causing my friend to leave the state from her boyfriend’s work leads drying up. Then maybe I’ll leave too. As unix/network programmer I don’t have much attachment to any particular place, particularly a Boston without my friend. That’s not a general argument of course, but I’ll put it out there, since I know you ask for feedback for a reason.
If it’s to go I’d hope some amount of credit or subsidy would be shifted to the arts in its stead. If you wipe out the local film industry that’s yet another thing making Boston this realm of computer programmers, finance folks, healthcare/pharma people, the general working class and others not affording their rent and on their way out, and not much else.
Who in the state government is it that takes stock of where we are culturally? Probably there are better ways of funding the arts than paying large studios, but I wonder if there’s not some kind of ecosystem where the big things allow the smaller things a meal ticket. Er, sort of the arts equivalent of the car manufacturing supply chain with all it’s various parts suppliers, etc.
I may be wrong, but I believe the major cost to the state is when the recipients of these tax credits sell them to others. If a production company has unused tax credits, I, a MA resident, who has nothing to do with making any sort of film, can buy them from them (typically through a broker) at a discount (usually somewhere around $0.95 per credit $1) and use them to offset my personal tax liability that I would have otherwise had to pay to the state, so MA is losing the tax revenue from me because of these credits. If the production company never received the credits, I wouldn’t have been able to buy them to off set my liability, and MA would be that much richer.
Wow, that’s weird. I mean, it partly is ordinary. Looking at 38X of state law:
“(e)(1) All or any portion of tax credits issued in accordance with the provisions of this section may be transferred, sold or assigned to other taxpayers with tax liabilities under this chapter or chapter 62.”
“Under this chapter” I get. So you can give to another film company who would qualify under 38X. So it makes the total amount dispensed for film bigger. Whatever.
But the “or chapter 62” part is puzzling. Chapter 62 is all of state income tax. So it’s like you say, they can transfer it to any old person paying income tax? That is very bizarre. Let’s have a credit to encourage some arguably desirable activity but let’s also create a tradable commodity out of it that can be redeemed by whoever.
I wonder how big the amounts traded or given to non-film people are (assuming my interpretation is right — I am so not a lawyer). Any patterns in who these credits go to (no members of the house I hope)?
It is high time that the Film Tax Credit (giveaway) was terminated. Apart from some pride in being able to say to friends and acquaintances – “Oh, I know where that is!” when commenting on a film there is little value that STAYS in Massachusetts. Nobody is going to come to the state as a tourist to peruse a particular set in any movie. Most of us agree with the attitude of “Buy American” how about ‘State taxes should STAY in the State’ to benefit Massachusetts.
I totally agree with you, Will. Keep on opposing the MA Film Tax Credit.
While it is nice to see movies that were filmed here, I agree that the credits are ultimately not worth the “benefits”.
The numbers do not work. Dump it.
The romance factor is way over done. Put that money to work, intelligently and substantively, elsewhere.
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