Deb Fastino from the Coalition for Social Justice and the Coalition Against Poverty was holding up this sign in mid April 2008 and we blogged about it here on April 21 2008.
We couldn't resist reposting the blog since the distiguished findings of Mass Inc and the Mass Budget and Policy Center (linked below) have been confirmed by the second consectutive Herald's story by Dave Wedge “Chasing a Pipedream”
April 21 2008: Everyone likes to see their hometown on the big screen, and many states are competing to entice blockbusters with tax incentives, hoping to attract this relatively low-pollution, high-profile industry.
The question is whether Massachusetts taxpayers are getting enough return on these investments. In Commonwealth Magazine , Bruce Mohl explores the potential direct and ripple effects of films on the Massachusetts economy:
The Revenue Department estimates it will collect $18.6 million in employee withholding taxes from the films that have come here so far, well short of the $138 million it will cost in tax credits to lure them here. Film industry officials say far more tax revenue will be generated as the movie spending ripples through the economy, but no one knows how much. The other big unknown is how long our credits will remain attractive; other states keep ratcheting up their credits to steal the business away.
And the Mass Budget and Policy Center's Brief on the Film Industry Tax Credit digs deeper into several aspects of the film credit, including the credit's cost, effects on job creation, and how it lines up against other types of credits:
The 25 percent rate is significantly higher than most credits in the state tax code. For example, Massachusetts has an investment tax credit that provides a credit of 3 percent to certain companies that make investments in qualified tangible property. The state also has an Economic Opportunity Area Credit that provides a credit of 5 percent of the cost of property a business invests in within an economic opportunity area.
With a $1.3 billion state deficit, how can we justify subsidizing an industry that has a negative impact on revenues and a minimal impact on job creation? Shouldn't we be spending that money on public structures that have the potential to truly stimulate our state and our people?
PS– NOTE the April 2008 estimate of the fy 08 budget. OH MY
Crossposted at ONE Massachusetts.
are actually pretty informative
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p>Some of them anyway. Here’s a few.
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“Film industry officials say far more tax revenue will be generated as the movie spending ripples through the economy, but no one knows how much.”
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p>I thought it was well established that different actions have different multipliers. When considering the stimulus bill, for example, everybody was saying that tax cuts would have something like 90 cents on the dollar in stimulative effect, but infrastructure would have $1.41 and food stamps $1.73. (Numbers made up, but they were in that ballpark.)
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p>Why don’t we have any idea what the multiplicative effects would be here? Though I gotta say, if your yardstick is “how much will we collect in taxes vs. how much in tax credits are we giving away”, you’re fishing for a very high factor (and hoping you don’t find it).
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p>I mean, if the tax rate is 5.3% then a tax credit needs to “stimulate” by nearly 20x in order to get that much in taxes back again. That never happens. But is that really the point of these tax credits?