The Massachusetts film tax credit program has been a flop, a taxpayer rip-off that enriches one of the nation’s most profitable industries while choking off funds from more pressing public needs. Naturally, some legislators are now eager for a sequel.
The Bay State has been lavishing corporate welfare on movie producers and Hollywood actors since 2006. It gives production companies a 25 percent tax credit on anything they spend to make a film or TV show in Massachusetts — credits they can sell for cash to third parties. Like most schemes that use public funds to bribe industries into doing business in Massachusetts, the film tax credit program has been a loss-maker from the outset. The Department of Revenue’s most recent annual report on the program noted that while filmmakers in 2010 collected $14.6 million in tax credits, their productions generated only $800,000 in new state revenue. That amounted to a paltry 5 cents of tax revenue for every $1 in tax credits the commonwealth gave away. (In 2009, Massachusetts awarded credits worth $83.3 million, but reaped only $10.4 million in revenue —12 cents of tax revenue for every $1 in subsidies.)
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Very well said. This type of policy makes the politicians feel good, because it is akin to spending money. Liberals love to call lowering marginal tax rates SPENDING money whisch has a definitive COST. That is largely a false supposition. But giving away credits to favored industry does have an actual price tag, because that credit will lower the tax bill of someone. If the favored industry does not come here without it, one could argue that ANY tax revenue received is a net gain, but that is a stretch.
First this is not a liberal/conservative issue.
Second, I completely agree that a subsidy like this is rediculous. If pre=Broadway shows can make money here they will come, if they can't they won't As for the Convention Center, doomed at birth.
But Jeff...aren't low taxes ALWAYS the solution to EVERY problem? I'm surprised at you. What happened to all your prosletyzing for low taxes and reduced regulation?
Oh, wait...that COSTS money that could be used for "higher purposes"?? How about that...
Jeff - have not commented in a while on your work. Cannot say I fully understand the issue, but is there a better way to lure this type of investment that will make money for them, AND bring jobs and revenue to the state? Take care - Dave
The agribusiness and energy sectors (to name two major examples) receive corporate welfare that absolutely dwarfs anything the entertainment sector gets. There are far more and more important politicians who throw themselves at the feet of Archer Daniels Midland or Koch Industries, yet Mr. Jacoby and his conservative brethren don't seem to mind corporate welfare unless they disapprove of the recipient.
Although I disagree with government interference in the free market, at least we get something of value from energy companies and agriculture.
NER,
Jacoby has not advocated corporate welfare for agribusiness. I recall that he did a column months ago arguing for elimination of farm subsidies. Please don't put false words in his mouth.
These kinds of state-based tax breaks should be made illegal on the federal level lest we have a nationwide race to the bottom that allows businesses to pit states against one another in a race to the bottom at the expense of their poor and needy.
That said, as long as they are legal in other states, it's hard to see how a state with a real chance at attracting major productions could afford not to offer some tax concessions.
Most state based tax breaks are pointed at more main stream businesses or sectors (General Electric in Mass for example), and it certainly looks like the cost in lost revenue to the state usually outweighs any benefits, especially when states view it as a competitive necessity.
And note that a tax break only "costs" money if you assume you would have brought it in otherwise. If it creates a local movie production industry where before there was none, and you would never have had one without the tax break, even $800,000 must be considered a "net positive."
Yeah, but they will be "GREEN" plays.....
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I meant what I asked earlier - IS there a better way to lure this type of business to the state? I honestly do not know, but the posters here don't seem to be taking the subject, which Jeff is putting forth to us all, seriously.
A point to ask is who cares? If it costs far more to bring it in (and its being argued economically..not culturally), than what the state gets is a loss.
If you want to attract theatre groups, get theatres to be packed all the time for a long time. That doesn't require tax credits, it requires an interested populace.
A point to ask is who cares? If it costs far more to bring it in (and its being argued economically..not culturally), than what the state gets is a loss.
If you want to attract theatre groups, get theatres to be packed all the time for a long time. That doesn't require tax credits, it requires an interested populace.
For once i can agree with at least some of what Mr Ro...er, I mean Jacoby is stating here: This type of "enticement" to come here with a somewhat esoteric form of entertainment (not that I am in any way against off Broadway theater, or pre-Broadway theater) usually doesn't produce much in the way of benefit for the entire state economy. It didn't work too well with the movie industry and I doubt it will be successful with pre-Broadway theater productions. But, it is also true that our state government (never mind The Feds) gives tax breaks and credits to a number of enterprises that are somewhat related. The Patriots and The Red Sox come to mind here. But, given the financial state of reality we are in, it seems that giving taxpayer money to such a group doesn't really seem to make sense.
Jeff Jacoby is right on this issue: Stop the film tax credits and absolutely NO tax giveaways for
Broadway-bound shows. It is time the state reviewed tax incentives, such as those offered to Fidelity
Investments and other mutual fund companies. The middle class must pay taxes for everything.