Not too long ago, in a state very, very close...
The Masssachusetts Tax Credit Wars erupted. In about 2005, Massachusetts (along with many other states) implemented tax credits for film and television productions. If a production spent enough money in the state, it would qualify for tax credits. What followed was a boom in production in the the Bay State. Movies began to pour into Massachusetts like never before. From "The Departed" to "Mall Cop" to "21," for the past few years Massachusetts has felt like Hollywood East. Indeed, based on the tax incentives and the boom in production, several movie studios are in the planning stages of building permanent facilities in Massachusetts.
But then, the economy took a nose dive and the state began to run a huge budget deficit. Not, mind you, California proportions (but, huge nonetheless!). At last count, the debt was more than $2 billion. Some began to wonder whether offering tax credits to out-of-state productions -when the Bay State is in the hole- is wise policy. That growing chorus of opinion prompted this article in The Boston Herald: http://bh.heraldinteractive.com/news/regional/view/2009_03_28_Study:_Say_goodbye_to_Hollywood:_Report_claims_state_tax_credits_don_t_pay_off/srvc=home&position=0
The Herald article prompted an immediate response from the film community, including the state's own Mass Film Office (MFO). The MFO and others claimed the study was faulty, not to mention a conflict of interest for those who produced it. The tax credit wars were on!
Where do the Sages stand? As members of the local film community, we naturally want to see robust film production occurring in Massachusetts. Those who argue that tax credits drain the Treasury of revenue are perhaps missing the point of the credits. Credits, those who are for them will argue, are designed to lure productions to a given state and not to be a source of revenue for the Treasury (everyone knows how fierce the competition is for Tinseltown dollars especially from some of the right-to-work southern states). These mainly L.A.-based production companies will spend -and spend big- in the state on everything from equipment to labor to hotels and so on. It's an argument for supply side or trickle down economics, which, of course, is hard to measure because much of the spending a production generates is fungible. Those who argue against credits can easily point to a depleted Treasury as their proof positive of the credits' deleterious effects, while it's hard for the other side to provide metrics.
Whether a credit is exercised by the production or sold to a company in-state for use against its tax burden, it's clear someone's tax return is being eased--and thus the Treasury ends up with fewer funds. In the final analysis, it's political: Do you think money in the Treasury, where the state can spend it, is a greater good than in the hands of citizens? It's a debate that mirrors what's happening in Washington.
As for me, it seems pretty obvious: a decade ago there was next to no film production going on in the state. All that has changed now. You can't tax what isn't there, so if the tax credits are eliminated the productions won't come and no one will have revenue--not the state...not local businesses...not local workers. On balance, the State House might not have as much tax revenue for its coffers by providing generous credits, but it's local businesses that will flourish as they meet the demands these large out-of-state productions require. That impact may not show up on the balance sheet of the government, but ask anyone who has a grocery store near a production how they are doing: the response will be the only evidence one needs to come out in favor of retaining the tax credits.
-Randy
The Masssachusetts Tax Credit Wars erupted. In about 2005, Massachusetts (along with many other states) implemented tax credits for film and television productions. If a production spent enough money in the state, it would qualify for tax credits. What followed was a boom in production in the the Bay State. Movies began to pour into Massachusetts like never before. From "The Departed" to "Mall Cop" to "21," for the past few years Massachusetts has felt like Hollywood East. Indeed, based on the tax incentives and the boom in production, several movie studios are in the planning stages of building permanent facilities in Massachusetts.
But then, the economy took a nose dive and the state began to run a huge budget deficit. Not, mind you, California proportions (but, huge nonetheless!). At last count, the debt was more than $2 billion. Some began to wonder whether offering tax credits to out-of-state productions -when the Bay State is in the hole- is wise policy. That growing chorus of opinion prompted this article in The Boston Herald: http://bh.heraldinteractive.com/news/regional/view/2009_03_28_Study:_Say_goodbye_to_Hollywood:_Report_claims_state_tax_credits_don_t_pay_off/srvc=home&position=0
The Herald article prompted an immediate response from the film community, including the state's own Mass Film Office (MFO). The MFO and others claimed the study was faulty, not to mention a conflict of interest for those who produced it. The tax credit wars were on!
Where do the Sages stand? As members of the local film community, we naturally want to see robust film production occurring in Massachusetts. Those who argue that tax credits drain the Treasury of revenue are perhaps missing the point of the credits. Credits, those who are for them will argue, are designed to lure productions to a given state and not to be a source of revenue for the Treasury (everyone knows how fierce the competition is for Tinseltown dollars especially from some of the right-to-work southern states). These mainly L.A.-based production companies will spend -and spend big- in the state on everything from equipment to labor to hotels and so on. It's an argument for supply side or trickle down economics, which, of course, is hard to measure because much of the spending a production generates is fungible. Those who argue against credits can easily point to a depleted Treasury as their proof positive of the credits' deleterious effects, while it's hard for the other side to provide metrics.
Whether a credit is exercised by the production or sold to a company in-state for use against its tax burden, it's clear someone's tax return is being eased--and thus the Treasury ends up with fewer funds. In the final analysis, it's political: Do you think money in the Treasury, where the state can spend it, is a greater good than in the hands of citizens? It's a debate that mirrors what's happening in Washington.
As for me, it seems pretty obvious: a decade ago there was next to no film production going on in the state. All that has changed now. You can't tax what isn't there, so if the tax credits are eliminated the productions won't come and no one will have revenue--not the state...not local businesses...not local workers. On balance, the State House might not have as much tax revenue for its coffers by providing generous credits, but it's local businesses that will flourish as they meet the demands these large out-of-state productions require. That impact may not show up on the balance sheet of the government, but ask anyone who has a grocery store near a production how they are doing: the response will be the only evidence one needs to come out in favor of retaining the tax credits.
-Randy
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