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Cost of film tax credit: $108,000 per Mass. job

Adam Sandler’s “Grown Ups 2,” one of three Hollywood features filmed in Massachusetts in 2012, got $24 million in state financing.

LISA POOLE FOR THE BOSTON GLOBE

Adam Sandler’s “Grown Ups 2,” one of three Hollywood features filmed in Massachusetts in 2012, got $24 million in state financing.

Massachusetts’ film tax credit cost the Commonwealth $78.9 million in 2012, even as most of the economic benefits of local film production went out of state, according to a report by the state Department of Revenue.

The report, released Wednesday, found that only about one-third of the $304 million in spending generated by the tax credit was spent in Massachusetts. Of the nearly 2,000 jobs created by the tax credit, only one-third of those, or about 700, went to Massachusetts residents.

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That’s about $108,000 per local job.

The report, which the revenue department releases each year, provided more fodder for critics of the tax credit, who say it costs far too much for far few benefits to the Massachusetts economy. Noah Berger, president of the left-leaning Massachusetts Budget and Policy Center, said the tax credit could have been better spent on education or workforce development.

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“Giving tax credits to Hollywood producers is not a very effective way to help the Massachusetts economy,” Berger said.

But supporters say the tax credit is worthwhile investment that is building a local film industry, generating economic activity and jobs, raising the state’s profile, and boosting tourism. Lisa Strout, the director of the Massachusetts State Film Office, said that membership in local film and television unions is growing and highlighted the construction of massive sound stages in Devens as a sign the state’s film industry had entered “a new growth phase.”

“Developing a viable, sustainable film, television, and media industry takes time,” she said in a statement.

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The Motion Picture Association of America and the Massachusetts Production Coalition, film industry trade groups, said the tax credit is effective and would require sustained support to see stronger results.

The film tax credit has been controversial since it was put in place in 2006 to attract film productions to Massachusetts. The film incentives accounted for more than half of the $123 million in targeted tax credits distributed by the state for 2012, according to a separate report released Thursday by the Department of Revenue.

In 2012, the tax credit supported 118 projects, but the overwhelming majority of the credits — $60.1 million — went to just three feature films, the Thursday report said. Leading the pack was “R.I.P.D.,” a paranormal action flick starring Jeff Bridges that received $26.6 million in state financing and was a complete flop at the box office.

The other two movies — “Grown Ups 2,” which received $24.2 million, and “The Heat,” which received $9.3 million — were profitable.

Despite criticism, the film tax credit has enjoyed limited support of Governor Deval Patrick. Attorney General Martha Coakley, the Democratic gubernatorial candidate, also has said she supports the tax credit. The campaign of Republican nominee Charlie Baker did not comment on the tax credit specifically but said industry-specific tax credits should be used “on a short-term basis.”

Some 35 other states have similar credits, and supporters say Massachusetts would lose out on film production if it dropped its subsidies.

But Robert Tannenwald — — a former vice president at the Federal Reserve Bank of Boston — said the highly mobile nature of film industry is why it should not be subsidized. It would make more sense to provide incentives to industries likely to put down roots here.

“If everybody jumps off a cliff, does that mean it’s good policy?” Tannenwald asked.

With a few exceptions, the Massachusetts tax credit pays for 25 percent of wages and production expenses for films, commercials, and TV shows shot in Massachusetts. Those productions also do not have to pay sales taxes.

About 5,700 state residents worked in film and TV in 2012. Since 2006 the program has allocated an average of $118,000 for every Massachusetts resident who finds employment in the film industry

Jack Newsham can be reached at jack.newsham@globe.com. Follow him on Twitter @TheNewsHam.
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