Massachusetts Governor Charlie Baker (R) tried to eliminate the state’s film tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. program earlier this year. That effort failed, and the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. credit continues to live on, wasting millions every year. On Friday, the state’s Department of Revenue released its annual accounting of the credit. The state estimates that $58 million in tax credits were awarded in 2014.
Under Massachusetts’ program, motion picture production companies can claim a credit equal to 25 percent of aggregate payroll and 25 percent of their Massachusetts production expenses. Firms must have at least $50,000 in qualified expenses to claim the credit.
In 2014, tax credits were awarded to a variety of firms for such important cinematic works as commercials for Cheetos ($20,339), Staples ($15,444), and Cadillac ($19,618). These credits are drops in the bucket compared to many credits issued.
Below are the top ten tax credits awarded in 2014:
|
Project |
Company |
Tax Credit |
|
Equalizer |
Columbia Pictures |
$15,546,926 |
|
TED 2 |
Raging Bear |
$14,043,474 |
|
American Hustle |
White Dog Productions |
$8,097,916 |
|
Olive Kitteridge |
Crosby Productions |
$5,175,613 |
|
Seas of Trees |
Grand Experiment |
$4,335,421 |
|
Grey Lady |
Grey Lady Productions |
$1,212,417 |
|
Terminales |
Term Productions |
$824,886 |
|
Good Kids |
GK Productions |
$670,398 |
|
Ask This Old House, Season 11 |
This Old House Productions |
$370,123 |
|
This Old House, Season 34 |
This Old House Productions |
$369,902 |
This follows a report from 2014 where the Department of Revenue detailed the limited economic benefits of the tax credit. My colleague Jared Walczak discussed the report earlier this year:
Back in September, the Massachusetts Department of Revenue issued a study of the program’s first seven years, from 2006 to 2012. The figures are bleak. In 2012, $78.9 million in tax credits resulted in an estimated $100.6 million worth of in-state spending, generating $10.6 million in new state revenue. So not only did the state lose $68.3 million on the deal, but total in-state spending was only 25 percent higher than the cost of the credits. And it gets worse: between 2006 and 2012, the Department of Revenue estimates a net increase in in-state spending of $261.1 million attributable to film incentives—at a cost of $411 million in tax credits generated (some of which would be realized in 2013 or later). Each job created—most of them lasting less than three months, or even “a few weeks, or even days,” according to the Department of Revenue—cost an estimated $118,873.
Governor Baker’s attempt to eliminate this dubious tax credit failed, but he should continue to push the state’s legislature to complete the task. Click here for more information on the issues with film tax credit program.
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