Over the past two months, I have heard from roughly 200 constituents in my district who are concerned about the Governor’s proposal to eliminate the film tax credit. The people I have heard from are all thoughtful, creative people whose livelihood depends on the credit, or at least has been greatly enhanced by the credit, which does attract film and video activity to Massachusetts. I admire their work and I understand their concerns and I sympathize with their angst.
I have, nonetheless, long supported elimination of this credit because it goes heavily to out-of-state movie stars and producers. It does help lots of people in the state, and those are the people I have heard from, but it is a very inefficient way of helping them. It is also hard to explain why this particular industry should receive such deep assistance when every other industry could also use help. Across the political spectrum, from the Pioneer Institute, to the Taxpayers Foundation, to MassBudget, Massachusetts think tanks who are unaffiliated with the film industry oppose the tax credit. It has endured because the film industry is well represented and well organized on Beacon Hill.
Some of the most thoughtful constituents who have contacted me indicated that they didn’t like the credit going to out of state movie stars and would like to see it used in a less wasteful way to benefit in-state workers. Many of the opportunities for in-state workers depend on attracting the out-of-state movie stars, but some of the people I have heard from run creative video and software businesses who are able to price their products more competitively in national markets as a result of their eligibility for the tax credit — their use of the credit does not depend on actually bringing film shoots to Massachusetts.
To further that conversation, in this year’s Senate budget we adopted a very modest compromise amendment, calling for a report. The amendment was offered by Senators Eldridge and Montigny, both of whom have historically been very active on eliminating inefficient tax credits.
The amendment reads as follows:
SECTION 105A. There shall be a special commission consisting of the members of the joint committee on revenue, which shall make a report regarding legislation modifying the motion picture industry tax incentive program, established in subsection (l) of section 6 of chapter 62 of the General Laws, section 38X of chapter 63 of the General Laws and subsection (ww) of section 6 of chapter 64H of the General Laws, after consideration of the following goals: (i) directing the employment benefits of the credit primarily to residents of the commonwealth rather than out-of-state residents; (ii) focusing on projects that provide long-term employment benefits to residents of the commonwealth; and (c) limiting the total cost of the program while maximizing its benefits. The report shall provide recommendation and any legislation necessary to carry those recommendations into effect. The commission shall consider whether any additional revenue realized should be directed to further expanding the earned income tax credit established in subsection (h) of section 6 of chapter 62 of the General Laws.
If the amendment survives the conference process with the House — which is doubtful, since the House tends to support the credit — it may lead to some future recommendations in this area.