Mass. loses big bucks on film tax breaks
Massachusetts has been wooing film productions with tax breaks as a means of bringing money into the state. But its Department of Revenue says the state has lost more than $95 million due to the incentives. Rico Gagliano reports.
A film being shot on location. (iStockPhoto)
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TEXT OF STORY
Kai Ryssdal: The monster success of the new "Transformers" movie aside, the summer hasn't been a blockbuster in terms of overall ticket sales. Hollywood isn't the only party that wants a slice of a movie's success. States offer huge tax incentives to film companies hoping the productions will bring money into the local economy. But a report from the state of Massachusetts shows that it doesn't always work out that way. Marketplace's Rico Gagliano reports.
RICO GAGLIANO: Massachusetts has been buzzing about a recent report from their Department of Revenue. The report says the state didn't actually earn money from the film productions that shot there last year. In fact, thanks to tax credits which Massachusetts gives to movie productions, it lost quite a bit. Steve D'Amico is a state representative.
STEVE D'AMICO: Report basically says that our net loss was $95.5 million.
This in the midst of a budget crisis. And D'Amico says Massachusetts hasn't gained $95.5 million bucks worth of local film industry jobs. He thinks the 43 states which offer tax credits to filmmakers should get out of the movie-wooing business.
D'AMICO: This is a massive waste of money. I mean, the problem is that this is a 43-state competition. There are 43 states, they go from state to state peddling this stuff, bidding states off against each other. So this is a race to the bottom we simply can't win.
Another state in that competition? California, where a nonprofit called Film L.A. wants its state government to offer more credits and incentives to film productions. Paul Audley's the president. He says despite the report Massachusetts has reaped some benefits from film production.
PAUL AUDLEY: Seventy-seven million [dollars] in wages were paid to Massachusetts people, and well over that -- $343 million dollars -- in GDP increases in Massachusetts over the same period.
Even so, Massachusetts representative D'Amico will offer a bill later this year to roll back the tax credits. Some senators in Pennsylvania hope to do the same thing with their state's credits, too.
In Los Angeles, I'm Rico Gagliano for Marketplace.
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From Los Angeles, CA, 07/16/2009
Not only is Massachusetts losing money on its "bribes" to the motion picture industry, it is probably violating the constitution. What is the difference between paying an incentive for Massachusetts goods and services and charging a tariff for goods and services purchased from out of state? Nothing in my mind, yet tariffs clearly are prohibited.
Also, if these incentives are such a great idea, how does Massachusetts (or any other state paying them) justify not paying such incentives to other businesses? Indeed, how do they justify charging these business the taxes it then pays out in rebates?
Put simply, the states that give Hollywood rebates are being ripped off by the major studios. Just look at the empty sound stages in North Carolina if you don't think this is true.
From MA, 07/10/2009
From the Dept. of Revenue itself:
DOR reported that during the first 3 years of the program, the state actually collected $5.5 million more in taxes than it paid out in credits. DOR figures show that new direct spending on film and television production generated by the FTC has exceeded $675 hundred million dollars since its inception in 2006. Since 2006, 62% of all new direct and indirect jobs created went to Massachusetts residents.
Since 2006, direct employment of Massachusetts residents in film production increased by 537%.
The median annualized wage for Massachusetts residents employed by film productions was $67,775.
This is a long-term investment to establish the infrastructure to support a huge private-sector industry in our state.
From Anchorage, AK, 07/09/2009
What part of tax revenue down $98.4 million PLUS additional FY10 $$ 13 to 18 doesn't Wynelle get? The bulk of the wages paid went to outsiders and Mass is on the hook to pay for Hollywood big shots to pocket many millions mas. Que lastima!
From MA, 07/09/2009
Actually, the DOR report states that "the state collected $3.6 million more in taxes than it paid out in credits during that three year period [that the incentive has existed]—because the law requires that filmmakers must first spend money in Massachusetts, and then pay taxes on that new spending, before they can receive or redeem any tax credits" and calculates the three-year average cost to taxpayers of .16 per $1.00 of economic activity generated. There's a big mis-information campaign going on right now, and, unfortunately, you guys got taken in. Do some digging on this story and you'll see the film tax incentive is bringing millions of dollars into the MA economy.
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