Left In Lowell

The Film Industry and the Tax Benefit

12 Responses to “The Film Industry and the Tax Benefit”

1. kpem Says:
   July 6th, 2009 at 9:48 pm

   I do not know exactly how the benefit is figured out. I do know that my company benefits quite nicely from the film industry. They provide a directory of Mass Companies to all the producers and they do seem to use many of the companies. We provide a good amount of equipment to them all around the state. I did notice when they filmed This Side of The Truth in Lowell and Mall Cops in Burlington that they used local warehouse space, local set designers, construction companies, security companies, office trailer companies, porta potty companies, fence companies, paint contractors, moving companies, etc… If you ask some of these small companies if this credit is rolling down they will give a resounding “YES”

2. Ryan Adams Says:
   July 6th, 2009 at 10:16 pm

   Sure, there’s a major social benefit to having a movie filmed in your back yard. It’s fun, you can probably score a spot as an extra (lol), and it’s a story you can tell for a long time coming.

   None of that changes the fact that the bulk of the credits are going to companies that aren’t hiring employees paying Massachusetts income taxes. It doesn’t change the fact that we’re losing 3 dollars for every 1 we spend. It doesn’t change the fact that we can’t even cap the Celebrity Paycheck so we’re not paying a quarter of Tom Cruise’s $25 million, or the fact that we don’t even make these film companies pay sales taxes! Why should Steven Spielberg get out of sales taxes when I, unemployed and broke, must pay them?

   I’m sorry, but this feel-good film credit gimmick is a luxury this state can’t afford when we’re absolutely decimating nearly every other aspect of the budget, including state funds to the Lowell school system.

3. waittilnextyr Says:
   July 6th, 2009 at 10:43 pm

   I expect the film tax credit returns more than what is being quoted, although without the report we cannot be sure. But I suspect they are measuring how much tax credit is provided, and how much taxes are paid directly to the State by the film companies and their employees.

   However, the taxes paid by the indirect beneficiaries (such as the restaurants, hotels, and small businesses that derive some revenue from the filming)is probably not included in the 16% estimate. And beyond that, there has to be a marketing benefit for tourism once the movie is released, something that really cannot be measured.

   Rather than doing away with the tax credits, the State should look at modifying the incentives (reducing them) to show a net gain considering both direct and indirect tax revenue.

4. Felicia Says:
   July 7th, 2009 at 6:27 am

   Here’s a nice rundown of a DOR report on the tax credit:

   http://www.mafilm.org/2009/07/06/dor-movie-spending-in-ma-is-676-million/

   This bit is of particular interest from the report:

   “*The $676 million in new direct spending, as of the end of FY 2008, came at no cost to Massachusetts taxpayers. DOR reported that the state collected $3.6 million more in taxes than it paid out in credits during that three year period—because the law requires that filmmakers must first spend money in Massachusetts, and then pay taxes on that new spending, before they can receive or redeem any tax credits.

   *Since 2006, 60% of all new direct and indirect jobs created, went to Massachusetts residents. DOR predicted that this percentage should rise as the industry matures and the crew base expands with the construction of new sound stages in Massachusetts.

   *Since 2006, direct employment of Massachusetts residents in film production increased by 537%.”

   Also, NEFA has an economic impact calculator for artistic endeavors in MA that may or may not be relevant for film activities:

   http://www.culturecount.org/public/coc.aspx

5. Felicia Says:
   July 7th, 2009 at 6:37 am

   Here’s the actual DOR report:

   http://www.mass.gov/Ador/docs/dor/News/2009FilmIncentiveReport.pdf

6. jed bartlet Says:
   July 7th, 2009 at 6:49 am

   Look at it this way. If there weren’t tax incentives for filmakers in MA, we’d be getting zero revenue as they’d be going to other states. With the incentives, we’re getting revenue. I’ve never gotten the whole “we’re losing revenue” argument as the revenue MA is getting is a bonus as we’d be getting nothing without the incentives.

7. Mimi Says:
   July 7th, 2009 at 6:56 am

   Thanks Felicia.

8. Ryan Adams Says:
   July 7th, 2009 at 10:57 am

   Jed,

   We’re not getting revenue from the film tax credit. We’re losing revenue. Hundreds of millions of it. http://www.ryanstake.net/2008/04/tax-credit-nightmare.html

9. Jack Mitchell Says:
   July 7th, 2009 at 2:52 pm

   Ryan,
   Look to the right -> See The Arts in Lowell? What should we tell budding film makers here in Lowell/MA?

   Consider it seed money.

10. Bob Forrant Says:
    July 9th, 2009 at 8:41 pm

    Tax incentives by themselves almost never generate their worth in dollars absent a very concerted effort tocapture back some addiitonal spending. In this case, tlaking to merchants in Lowell, esp. restaurants, they do not necessarily see much of a boost because most studios have their own food service thta they bring into town with them. Where there is value added is when folks live in an area for a while that would not be here otherwise and when truck drivers are hired locally and some of the technical crew too. For this to really work over time we need more and more education and training for the higher end jobs in film making on the technical side and things like stage building and costuming.

11. Teddy P. Says:
    July 10th, 2009 at 8:42 pm

    Actually Bob, the movie folks eat and spend quite well. Besides the influx of bodies that arrive when the filming begins, there are production and advance crews that have been here more than a month in advance, as there were with the last big flick filmed here. Those folks eat and drink every day. I can tell you first hand they’re out and about multiple times a week in our place, and even when they don’t dine out, they place $200-$300 take out orders at least once a week from us alone. My hunch is, we’re not the only restaurant or business in town benefiting from their presence.

    Perhaps the money spent in our individual place won’t make up for the million dollar tax cut deficit Ryan is quoting, but add up food, lodging, supplies, etc. and you close the gap considerably. Throw in the free advertising you get from the words “Lowell” or “Massachusetts” mentioned all over the country in reports about these movies, and I think we’re making out quite well, thank you. Anheuiser-Busch pays millions annually to television, radio and print media to keep the brand name out there. Massachusetts and now Lowell are getting that for free.

12. waittilnextyr Says:
    July 12th, 2009 at 3:28 pm

    After reading the DOR report I am more inclined to agree with Ryan. This looks like a 25% tax credit that overwhelms the State tax rates. It wouldn’t be so bad if those credits remained with the film companies, but apparently they can “sell” what they don’t use (the majority of the credit) to other companies for 90 cents on the dollar. I’d like to hear more from the people that came up with the parameters of the tax credit.

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