Last month, Michigan House lawmakers passed HB 4122, a bill that would put an end to the state’s film incentive program effective October 1, 2015. The program, known as the Michigan Film and Digital Media Incentive, partially reimburses (up to 25%) eligible production companies for certain expenditures incurred while producing digital media and film projects within the state. According the Michigan Film Office, total spending in Michigan must exceed $100,000. (If you’d like to read more about the program, see the Film Office’s FAQ here.)
We’ve long been critical of film 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. incentive programs. Back in November of 2013, we summarized the issues with these types of programs, all of which are worth repeating here:
- Jobs created from production are often temporary and may no longer be available once the company leaves the state to move on to another project. On a related note, it’s highly unlikely that these programs will create a permanent film industry within a state if there wasn’t one already.
- These programs don’t pay for themselves by generating new tax revenue from increased economic activity. In fact, most studies find they lose money. See here for some examples.
- The estimates of the economic activity generated by film production should be taken with a grain of salt. As a former colleague wrote several years ago, “[a]dvocates rightly point out that one dollar of film spending trickles through the economy and creates more economic activity. For instance, if a film production spends one dollar on wages for a worker, that worker will take that income and spend it in the economy, creating income for others, and so on…But the fact that film productions impact the broader economy is not unique to this industry.”
While HB 4122 is a step in the right direction for Michigan, there has been conflicting opinions from the legislature’s other house. Last year, Michigan Senators advanced a bill that would have expended the state’s incentive program (2014 SB 1103).
What may come of the bill in the future? According to MLive,
For this bill to become law and the film incentives to be eliminated, it would first have to pass the Senate and be signed by Gov. Rick Snyder. Senate Majority Leader Arlan Meekhof, R-West Olive, has expressed concerns. Snyder said Tuesday he’d favor a gradual ramping down of the credit over an abrupt elimination.
We’ll follow the issue as it develops.
More on Michigan here. More on film tax incentives here. Follow Liz on Twitter @elizabeth_malm.
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