As Judy Meredith pointed out earlier this month, Governor Baker’s proposal to kill the film tax credit and use the money to fund an expansion of the Earned Income Tax Credit is both a great idea, and would be very difficult to fight against. I certainly agree, since film tax credits rarely live up to expectations, while the EITC is a direct help to lower-income state residents who are working hard to get by. Plus, politically speaking, the framing (misleading or not, as some rightly pointed out that it’s part of the larger budget, not a standalone proposal) is just too perfect: cutting corporate welfare to help out the working class.
I was surprised that Dem leadership didn’t simply agree with the proposal and move on. Now, it looks like the GOP is making it a prominent part of their messaging. I got this email today:
The GOP is seizing on this opportunity to frame the Democrats as for corporate interests and ignoring the working class.
They’re even collecting signatures in support of the proposal, and while it only has 438 right now, it was only sent out an hour ago so I could see this gaining a lot of steam. If the Dems want to nip this in the bud, I think it would make sense to endorse the proposal, or else come up with an incredibly convincing explanation why it’s a bad idea. This is soundbite politics at its finest, and if there is a good reason to oppose it — which I’m not currently aware of, but I’m not claiming to be an expert on tax policy — it needs to be turned into as simple of a message as Governor Baker is using.
Let’s take a win when we can, rather than letting partisanship lead us to oppose good ideas and make these charges of “saving a Hollywood handout at the expense of the working class” actually true.
Instead of representing all Democrats, the Massachusetts Democratic Party has chosen to side with the conservaDems on its facebook page: https://www.facebook.com/MassDems
McGee needs to go.
McGee is pretty damn good compared to the rest of the party, a decent fellow and very progressive.
If everyone goes along with hypocrisy then everything seems fine, but when the GOP says the emperor has no clothes, everything comes tumbling down like a house of Cards. The hypocrisy is between the Democratic Party in deeds and actions.
This was a great post, I wouldn’t have otherwise known the GOP made a clever move. It requires some critical thinking, something the Dems seem to need. I’m tired of the regurgitated and unoriginal talking points coming out of the state party. Democrats are supposed to recognize the importance of naunce and complexity of the issues facing our state. Instead I hear a semi-liberal version of the dribble I hear on fox. I prefer to think for myself.
I hadn’t heard, but am not surprised, to hear it was the Republicans who originally pushed the film tax credit and Romney who signed it into law. Definitely ironic Baker is making it a big issue in the other direction now, but Republicans creating it seems like even more reason for Dems to support ending this crazy subsidy.
Although it is true that Gov Romney signed the first film tax credit in 2005, the credit under that law was relatively modest. It was limited to $7 million per film and it was not a refundable credit.
The law that really opened the spigot was signed in 2007 by Gov Patrick. It lifted the $7M cap and most importantly, made the credit refundable, so that the film company received a cash refund of whatever credit amount was not needed to cover its tax obligations.
Details here.
for the insightful article. Good to get even more background on this – seems totally absurd that we foot 25% (!) of the bill for film productions. And that it just ends up benefiting financial institutions anyway.
While I’d prefer we just end this subsidy altogether, the tax liability co-op is actually a pretty great idea if it sticks around.
It’s done it’s job and lists of movies have been made here. Producers/directors know what we have to offer in terms of i infrastructure, personnel, talent, etc.
I am surprised by the timing, though. I thought the credit went back to Cellucci, Plymouth Rock Studios, etc.
In the era of Big Data, why can’t we get an answer to a simple math question: Have these tax credits been a net positive for the economy? That is, does the granting of these credits generate enough additional economic activity [and resulting tax income] to warrant their issuance?
Seems pretty freaking straightforward to me and an essential question to have this debate intelligently. [And it also happens to be the Republican argument for tax credits in other areas; why is this one different?]
This move by the GOP is clearly meant to drive a wedge and has been effective: Yes, the working poor who access EITC are Democratic constituents, but so are the thousands of union workers who drive trucks, set up lights and make coffee for extras.
my sense is that answering it isn’t so easy. It’s simple enough to measure jobs “created” by the tax credit – and by that measure, there doesn’t seem to be much evidence that the credit makes economic sense. But once you get into “economic activity,” it gets much harder, because then it’s hard to figure out how many cups of coffee sold by local vendors were due specifically to a film being made, and how many would have been sold anyway.
Whether you think the benefits of an investment are “apparent” or “dubious” typically depends on your political views and/or your views of the economic activity.
This could be social spending or attracting businesses with tax breaks, with the results so hard to measure it often just comes down to a guess. You can make an educated guess, however. We’ll see what the proponents of the credit say. For Baker to be opposed, though, he must have seen some analysis that says it’s not worth it.
We can make the question hard to answer, but we shouldn’t. Couting cups of coffee isn’t worth it because in order to make up for 25% of the cost of the production expenses of a film, you would have to sell a hell of a lot of coffee, and when you boil it down, you could get the same (if not more) economic impact by giving free vacations to the same number of people as are in the crew for a lot less money.
The way to analyze this is pretty easy. Pick a representative film and audit it. Look at the amount of time spent filming in the state. Look at how much local vendors were paid for services (versus if out-of-state vendors were brought in). Deduct the amount of the actors salaries that were subsidized (because that is clearly not an economic benefit to the state even though the state allows them in the credit calculation).
Use “American Hustle” as an example. How long did they film in Worcester? Outside of Worcester, how many people actually even knew they filmed in Worcester? I’m guessing “not many”, which means that you throw out any talk about the filming “helping the city’s reputation” or other such intangible crap. The movie budget was reported at $40m. How much tax credit did they receive?
Funny how the producer of that movie made this threat: “Because if there are a half dozen other states offering a rebate, why would you come here? If that goes away, we’ll end up in Atlanta, Louisana.”
Problem is, there are not a half-dozen other states offering this rebate. Forty-four states offer some kind of filming incentives. We’re being fleeced.
And this question has apparently already been asked, and answered in 2011. From the Globe:
not an intractable one. It’s just that everybody likes to politicize economic analysis. Wups, better invent some data that support my facts!
Multiplier-effect calculations ripe for that sort of thing, see wonderful benefits of casinos.
The harder question is separating out the free riders, unless you assume no films would be made here without the credit.
to measure jobs “created” by any tax credit. If you are a business that is going to create the job, you are doing it because it makes financial sense, it is profitable. You get the credit as an added bonus and it becomes extra profit, courtesy of the taxpayers. If you create the job simply to get the credit, you kill the job as soon as the credit is unavailable. There is no mechanism in existence to discern the difference but the taxpayers are out of the cash.
Look at the Raytheon scheme, Fidelity, the single-sales factor, the ITC, the R&D credit and all of the other garbage that business lobbyists ask for and you will see how they rob the state. I remember one instance when the biz world said they needed an employment tax credit to counter the effect of the investment tax credit. After all, they argued, since the lege put its thumb on the scale to encourage investment in machinery, it had to balance the scale by encouraging new hires with an additional tax loser.
The Dems are as bad as the GOP at buying into this stinking pile of excrement. Dan Bosley, who was one of the better members of the House, was unfortunately enamored of every tax scheme that AIM threw at the lege. Like so many policy makers, he thought he was smarter than the financial markets. I remember one of his lesser efforts, in 1991, when he proposed a job creation tax credit amendment to the budget. He argued that giving a modest amount, on the order of $1000, per job created would more than pay for itself with the additional income tax revenue it would generate. Revenue neutral at worst or more likely a net positive he and AIM argued. Except the credit would go to the businesses that were already going to create tens of thousand of jobs anyway. It was adopted in the House almost unanimously with only one Democrat voting against it, a notorious pain-in-the ass member. Two days after the vote the Department of Revenue indicated that it was a $100+ million annual giveaway and it quickly died.
These so-called business tax incentives are the antithesis of market based economics and are the brainchild of lawyers and lobbyists who have learned how to manipulate policy makers to grab extra cash for both the businesses that benefit and the lobbyists who peddle the snake oil. One of the reasons that GE pays effectively no federal taxes is because of their 1200 tax lawyers in 44 countries working in-house. They can always kill the Congressional and IRS experts by manipulating the code.
Massachusetts simply fell prey to a smaller but comparable scheme with the film credit. Give politicians a chance to stand next to Hollywood stars and watch how fast they do the pucker-up.
It was adopted in the House almost unanimously with only one Democrat voting against it, a notorious pain-in-the ass member.
dibs on Chris Hodgkins.
was part of Flaherty’s leadership team in those days. He hot his stride at making trouble when Finneran became Speaker. Chris could be a lot of fun to watch when he got wound up on the floor of the House.
EOM
I get the notion of credits, or direct investment, to help a fledgling industry get off the ground, but at some point that industry needs to be able to wear big boy pants and pay its taxes.
We’ve seen grotesque manipulations of jobs-for-tax-breaks deals: Raytheon, Fidelity. The lesson I’ve walked away with is that MA shouldn’t be so desperate. Much as I’m supportive of the sorts of jobs the film industry funds, I think the value proposition of filming here needs to stand on something other than a tax credit. Talent, reliability, location — those should be the selling points.
Paying taxes should be part of the cost of doing business. The exceptions should be exceedingly rare and the film tax credit should not be one of them.
There isn’t a lot of up-to-date stuff, and there are a lot of holes in the existing data. Empirically, it’s very hard to come up with a definitive answer. A good question to ask, how many jobs does the credit create and how much does each cost? Theanswer for Louisiana was, 3,000 additional jobs at
a cost, at best, of approximately $16,000 per job in foregone tax revenue
The Mass Budget and Policy Center has some stuff, however, that informative:
Ninety percent of a company’s credits can be paid (refunded) to the production company even if the company pays no taxes in Massachusetts. Thus a company that spends $10 million in Massachusetts and pays no taxes in Massachusetts could receive a check from the state Department of Revenue for 90 percent of $2.5 million.
Did you really think it was just the Teamsters that were benefiting from the tax credit?
There is a tax offset, but the multiplier effect is likely far less than less than 1. The best evidence of this is from a Louisiana study, which both the MBPC and the FED cite, but the authors of both the say it’s very hard to determine the effect:
(It didn’t take 5 minutes to find this information.
desire his liberal credentials. It is hard to know if his very vocal defense of the credit in the past, as Chair of the Revenue Committee, was because he really believes in the credit or if he was just being DeLeo’s lapdog. He has not done much of any use in his position as Chair of one of the super-committees, except collect his annual $15,000 bonus. Hard to imagine him breaking with DeLeo on this, or explaining to his constituents why he was so wrong the last time.
I remember DiMasi being a total suckup on this when DeNiro came to town and Sal brought him around (or maybe it was Hollywood who had Sal on the leash) to claim the two were buddies. It was part of the mega-ego of DiMasi that gave us this steaming pile.
“despite” not “desire”. Sometimes I hate autocorrect.
Just like the Republicans. Way too many unopposed candidates every year, too much fear of running, maybe even a sense among the public that only lawyers can run for office, so government has become nothing more than a creepy club for the economic advancement of its members. The moral caliber of politicians is in freefall, and something nerds to change.
.. because it’s Charlie Bakers bullshit train to chumpsville.
I don’t want to play ‘give-n-get’ with either the EITC or the film credit. I don’t think that raising the bar on EITC expansion is particularly progressive: expand it because it needs expanding; don’t hold EITC expansion hostage to something completely unrelated. Likewise, nix the film credit on it’s merits (or lack thereof) not because you want to poach a number on a budget line to goose another budget line somewhere else. That’s just a budgetary shell game that has the added advantage (sic) of being a proper wedge. Telling me that such games are progressive is trying to convince me it’s raining when you’re pissing on my leg.
Last year’s budget is always the starting point for this year’s budget
-and-
the budget has to be balanced.
If you want to increase a budgetary expenditure (e.g. EITC), you’ve got to find the money. Three choices:
1. Cut expenditures somewhere else (e.g. film credit)
2. Raise tax rates
3. Raise revenues via taxed increased economic activity thanks to the policy.
The GOP leans on (3) far too heavily, with disasterous results. It’s not that it doesn’t exist, but it’s overplayed by a ton. That leaves (1) and (2). The proposal is to get the EITC expansion through (1), rather than (2).
That ain’t the only way to do it, but it ain’t crazy.
… but it ain’t progressive. Saying it is, is crazy. The question was asked “dropping film tax credit to expand EITC is both progressive and populist, why aren’t Dems on board?” and I said both that this particular Dem was not on board and why the coupling of these credits in this manner was decidedly not progressive either. I get that the budget has to be balanced and the appetite for tax increases is nearly nil, but that’s altogether besides the point of whether or no this is ‘progressive’.
To be clear, the specific wedge of pitting “hollywood” vs the poors is decidedly not progressive either. There’s no clear function between cutting film credit and expanding EITC: one isn’t particularly tied to the other. Charlie Baker made the specific decision to pit the film credit against the EITC. He could have said, ‘we’ll find the money for EITC expansion somewhere’ or he could have identified any of several dozen other particular credits and/or loopholes to close or he could have made the decision NOT to expand the EITC altogether, but he chose to couple these two credits in a way that might divide opposition to him. A classic wedge.
When judy-merideth offered the first thread regarding the EIC proposal, I had a similar reaction.
Standing on its own, of course I support expanding the EIC.
In the context of either distracting attention from the MBTA issues, driving a wedge between voters, or attempting to justify “No new taxes”, I oppose it.
It is the premise — “No new taxes” — that is both insane and not progressive. I suggest that we not allow ourselves to be manipulated into discord by accepting that premise.
The EITC would seem to be progressive. Sure, poor folks without earned income don’t benefit, but middle class and wealthy are ineligible to benefit. It would seem that, on balance, expanding the EITC is progressive.
Is the film credit itself progressive? Sure, it has some economic benefit, but that sounds suspiciously like supply side economics to me. It would seem that the folks “cashing in” on the film credit are wealthy. Eliminating it, and putting the money in the general fund, would seem progressive.
Where is my logic not aligned with your thinking? Is expanding the EITC progressive, apropos of nothing? Is eliminating the film credit progressive, apropos of nothing? Is doing two progressive things in one fell swoop progressive?
Which would never happen, with guys like Deleo in office.
… Without deliberately acknowledging that the film credit lacks a progressive sheen, I’ll follow your argument and play along saying, for the nonce, that it is ‘supply side’ and therefore anti-progressive and that, apropos of nothing (else), dropping the credit might be the progressive thing to do.
Which means, supply siders would want to keep it and, thus, tying the film credit to the EITC gives a potential veto to the supply siders (if they can muster sufficient numbers )… consider the case where there are votes to expand the EITC but there aren’t votes to drop the film credit: under this coupling, the film credit continues and the EITC is not expanded exactly and precisely because of the support for the film credit and not because of anything to do with the EITC… and that’s not progressive. Especially if a coalition of supply-siders and and anti-EITC fulminators work together. That’s why and how a wedge divides.
Under your thinking, in it’s simplest form, Charlie Baker is saying “I won’t drown the government in the bathtub in order that we can have more welfare.” In that instance the people who DO want to drown the government in the bathtub and who are often the same people DO NOT want more welfare will push to go ahead and drown the government and have less welfare over all: that is to say a veto on welfare. That’s not progressive and I’m not on board for it.
But I don’t accept that the film credit is not progressive. There’s nothing stopping anybody, presently wealthy or no, who are presently living in the commonwealth from making a film and collecting on the credit. If it’s progressive to want to help people become wealthier than –strictly speaking — there’s no quicker way to do that than to make a film: Hollywood is a multi-billion dollar industry and one good film could turn a profit many times in excess of the money input. The cannonical example is 1993’s “The Wedding Banquet” one of Ang Lee’s earlier films. It was made it for one million dollars and it grossed over 20 million in 1993 alone. (it’s a really good movie, too). If it had been made in Massachusetts under the film credit it would be even more profitable because whatever taxes were paid on that one million dollar production would have been decreased by twenty-five percent. I do not think that just because rich people can and do make make films (most often very bad films) that the credit redounds only to rich people. Nuance is progressive also.
I’ve elsewhere asked about the impact on tourism, which is an industry dependent on those who might qualify for EITC: hotel and restaurant workers. You want to ask them if they want more EITC or more work? What do you think they would say? Tourism is the third largest industry in the CommonWealth. Would axing the tax credit hurt that and, if so, Is that progressive?
. . . you’d be in pretty good shape, Petr.
… means ‘does not follow’. It doesn’t mean “can not follow’. That’s a separate problem.
instead of making assumptions about what others think. Honestly, Petr. As a relative latecomer to the thread and BMG’s perennial contrarian, the burden of proof is on you. You want evidence? Provide it. I’ll give you started:Here’s just a little on the multiplier effect of the EITC:
In other words, the EITC tends to pay for itself. The Film EIC does not. (See below).
… Let us recognize that the very title of this diary makes certain assumption about what people think and/or ought to think as well as suggesting a single, orthodox, course of action based upon those assumptions. I will always be contrarian in the face of that.
Questions of efficacy — while important overall — are of little relevance to this debate. We can argue if they are effective or not, and that’s a valuable argument to have, but that’s apart from whether the motivation for them is progressive (decidedly so in the case of the EITC, less clearly with regards to the film credit and decidedly not with respect to coupling them together).
There’s this pie called the state budget. You can only cut it so many ways, without making it bigger. Every aspect of the state budget is a “function” of every other aspect.
We refer to those “functions” as priorities.
Now, someone who refers to struggling working families with kids to feed as “the poors” may not necessarily share the same priorities as decent human beings, but that’s a subject for a different comment.
It’s really a simple way to transfer wealth, and old fashioned lunch bucket liberals understand it better than process obsessed progressives who worry about hidden agendas that drive wedges between “poors” and “near poors”. Geez.
… therefore, a particular link drawn between any two separate aspects is arbitrary. If every aspect of the state budget is a “function” of every other aspect, why are these two things — and just these two things — coupled together? Surely there are aspects of the CommonWealths budget which are more pernicious and decisively more anti-progressive than the film credit? So why tie the EITC to the film credit?
…And for some people, sometimes very powerful people, a film tax credit is a priority over expanding EITC. So if you tie the expansion of the EITC to the axing of the film credit.. guess what… you’ll get neither if more people prioritize keeping the tax credit. That’s what a wedge does: it plays separate priorities off each other. That’s why it’s effective. You want the outcome(s) so ardently you don’t see the damage you’ll do to get there but because you don’t see it, doesn’t mean it won’t happen.
If I were in the legislature, I might very well vote the way you want me too… Expand the EITC and drop the film credit. But I don’t expect that others will, automatically, vote with me in this way. And if the EITC expansion becomes a function the dropping of the film credit, then that represents a wholly arbitrary veto on the expansion of the EITC based solely upon what people think about the film credit. That’s very far from progressive. I’m not saying the outcomes you particularly desire are unattainable. I’m saying that there exists a scenario which is lose-lose whereas the entire tenor and direction of this entire diary is that it’s all win-win. It’s not. Wake up. Stop being so naive.
What a peach you are. If that’s what you think about me, you can kiss all my available cheeks. I do not think, as I’ve amply demonstrated, that the issue is about the gross caricitures of either “hollywood” or “the poors”: I have chosen to paint the argument others make with a broad brush to describe the choice that people like Charlie Baker present. If you chose to impugn my decency over that, well jog on.. .
For awhile, the world was awash with waves from the Laffer curve, a truthy concept that appeared to prove that lowering taxes increased marginal revenue (so long as the tax rate was in an undefined middle ground between 0% and 100%).
It had a fatal flaw: it was based on the assumption that the government could not grow the money supply, and therefore that governments could not carry a deficit. In real life, governments are perfectly able sustain a deficit, and in fact usually do because it’s actually healthy for the economy.
In my view, this constraint suffers the same flaw. When we impose a “no new taxes” constraint a priori, then every increase in spending for one piece of the pie must be offset by a decrease somewhere else. Since we’ve been doing that for a long time, nobody has much left. So whenever any Paul gets paid, several Peters correctly scream that they are being robbed. They ARE.
All this happens in a state economy that is concentrating wealth in its top one or one-half percent, and taking that wealth away from the remaining 99 or 99.5 percent.
The wedges between “poor” and “near poor” are not illusory or a fabrication of “process obsessed progressives”, they are the stock-in-trade of how government officials of both parties have done the bidding of the top 1% for a very long time.
So we have “tea party republicans” doing battle with “liberal Democrats” about “EBT abuse” — and the wealthy keep right on sucking both sides dry.
The answer is to tax the wealthy. It’s not hard (except it means taking down Bob DeLeo) and it solves the problem.
slip in some assumptions to piss people off, respond with insults when they challenge you, and then show yourself to be a guy who’s willing to stand by his unpopular opinions. All because everyone else is wrong.
ONE WORD: TROLL
Please explain to everyone why the Film Tax Credit has anything even remotely to do with EITC. You could just as easily say that the EITC is being funding by removing full day kindergarten grants, or you could just as easily say that it’s being funded by layoffs within understaffed DSS based on Baker’s budget proposal. Why the Film Tax Credit? Please we are all ears.
Did you read the diary? Cancelling the Film Tax Credit to fund the EITC? Did you read Petr’s comments? Did you read my other comments?
Yes, there is an entire budget. Sure, we could cut Chapter 90 funds to to fund the EITC. There is no magical connection between EITC and the motion picture tax credit? So what? It’s another one of Petr’s red herrings. There are an almost infinite number of budget items that have nothing to do with each other. I’m not saying the Film Tax Credit is displacing money that is going to the EITC.. That’s another red herring. The issue is, should one displace the other. That’s what”s on the table. Or did you miss that too? See my other comments. To me, it’s a matter of comparative advantage.
Petr offers a school of red herrings wrapped in glibness and subtle insults to argue with people. I’m calling him on it.
… because that’s not what the diary is about: it’s about assuming J Random Dem should act in accordance with the assumptions about the proposal. The spine of the argument, such as it is, boils down to, “well… duh…!” Which, in case you’ve actually never deeply read anything I’ve ever penned on this blog, is not something I particularly accept.
And I see your call and raise you on the actual debate: you want to play ‘give and get’ you better be prepared to give and to get. I don’t think this proposal does that to the degree you think it does. Furthermore, I think there are other considerations which means you won’t get a thing, anyways… and I don’t care to hear someone, glibly and subtly, questioning my Dem bona fides right from the start. Nor do I particularly care to debate some who shouts “look troll!” at the first sign that I might want to put the brakes on. Deal with it.
“Why aren’t Dems on board?” I think you missed the point: it’s not about you (This Dem isn’t on board…, I don’t care to hear someone, glibly and subtly, questioning my Dem bona fides right from the start.). Sam Tracy is talking about the legislature, which, to date, has shown no interest in the governor’s proposal (whether it’s genuine or political or both). He wasn’t talking about every Democrat in Massachusetts.
Is it Baker’s proposal progressive? I think Sam Tracy is saying is the effect progressive. I think that’s what Judy Meredith and Stomv were suggesting. As Ryan explained, in a budget, money gets shifted around. Taking that money that is rather ineffectively expended and putting it into the EITC is progressive. Bob Gardner called it a non-sequitur. You inferred that he was too stupid to follow what you were saying.
So why are these particular credits linked? Baker started it. But it’s a budget. Everything in a budget is linked in that they are part of the budget. To take some money from one item and applied it to another is what often happens in a budget. You call the relation arbitrary. It is very much not arbitrary. Many on here (not me until I looked into it yesterday) have long considered this particular EIC a waste of money. Replacing it with the EITC, which has a lot of evidence demonstrating its benefits for poor people (the poors, I think you call them), and either pays for itself or makes a profit economically is not arbitrary.
That’s just plain funny. There’s no reason why it would be progressive to eliminate a rather costly tax credit with limited employment and economic benefits and using that money to improve the lives of the disadvantaged and to benefit the state economy as a whole. No reason at all.
… The question isn’t, strictly speaking, how many people does it support (even though that’s not a small number now) but how many can it support. There’s no reason that Boston can’t be “Hollywood East”, with a similar amount of money and an entire ecosystem of carpenters, electricians, tradesmen, set designers, hair and makeup, costumers, gaffers, scriptwriters and all that goes to support that. So we haven broken the nut on that yet?
The tax credit, though it often does goe to Hollywood elites who sell it to insurers, is not limited, nor is it constrained, nor tied, or otherwise barred from individuals or in any way ties the money to a specific region or corporation. It’s not like I couldn’t pick up a camera and make a film tomorrow and get the credit, though I’m not a big corporation. That’s the beauty of it. It’s not like the oil company subsidies, that require you to invest in shipping and cracking facilities and what-not. It’s not like subsidies for Wall Street, which are mostly dependent upon a hard-to-achieve brokers license. It’s not like the building trades that have to go through a union and the bidding process. Pick up a camera. Make a film. Get the credit.
Hollywood is, in fact, broken. It tirelessly churns out drek after drek in a downward spiral of lowest common denominator fail. If somebody steps in an replaces the broken system with a working system there are vast untold riches, and –more importantly, vast numbers of jobs — to be had. What, pray tell, prevents Boston from stepping into that breach?
Ask anybody — and I truly mean anybody — if they would rather keep their existing jobs with a better EITC or get a better job with less EITC…? Which one will they say they want…? I know what I would choose. It’s all well and good to want to increase the EITC in the absence of better options. But eschewing the possibility of better options to increase the EITC smacks of paternalism and not progressivism.
why Massachusetts can’t be Hollywood: Hollywood has been the center of filmmaking for 100 years. Other states offer the same tax breaks.
As far as the EITC goes, try doing some reasearch:
why Massachusetts can’t be Hollywood: Hollywood has been the center of filmmaking for 100 years. That’s where the talent is. That’s where the money is. Other states offer the same tax breaks.
As far as the EITC goes, you can’t deduce your way to victory in a policy debate. Try reading some reasearch. As the CBPP says, EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development, Research Finds:
It’s one budget, Baker came out with his plan. Days before he presented that lump of crap, he waxed poetic on the Film Tax Credit, it was pure spin before his budget release. So if you are keeping score at home:
Striking the film tax credit – good
Additional funding for the EITC – good
To continue to post linking these together, IMO is trolling. The problem is that’s not his entire budget proposal, there are some serious issues with the amount of layoffs and hidden cuts. So I ask that you start paying attention because you are cheer-leading horrendous cuts in services for those who cannot help themselves.
Baker’s budget isn’t much more than a proposal. The legislature will do what it wants and then they’ll negotiate. And then the legislature will override what they can if they don’t like it. That’s the process.
This thread, John, is about the film credit and the EITC. Not the budget.
I’m not cheerleading Baker’s budget or the cuts he’s proposing. We’re talking about one budget issue. I can agree with one part of the budget without supporting the whole or giving aid and comfort to the enemy. I might agree, for example, with his proposal for Chapter 90 funds. That doesn’t mean I think he can cut 4500 jobs.
What do you call the Governor’s budget?
A door stop.
About agreeing with Mark-Bail?
This is exactly the kind of discord that Mr. Baker and Mr. DeLeo use to keep the money flowing to the one percent.
All of you — mark, john, and peter — are correct.
The connection between the Film Tax Credit and EITC is more optics than reality. Mr. Baker is very carefully spinning it as a trade off — “Kill the File Tax Credit and use the proceeds to fund an increase in the EITC” — in order to avoid a discussion of increasing taxes.
So long as the size of the total budget is unchanged, then EVERY increase in one segment is paid for by a decrease somewhere else.
John is correct that any N cuts can be claimed as sources for any M increases. Peter is correct that there is nothing progressive about this frame at all. I disagree with judy-merideth that “it’s really a simple way to transfer wealth”.
Suppose a sole breadwinner is spending half his income on his very special hobby. The car is falling apart in the driveway, and the unmaintained roof is leaking water into the house. Suppose this has been going on for years. This year, his daughter desperately needs braces. He says “we can’t afford it”. Then, he says “I’ve added an extra $3,000 into the repair reserve for the house, and cancelled the car repair we talked about”. We still can’t afford braces for Suzie, though.
Is he acting responsibly? I say “no”. I think the responsible thing to do is for the breadwinner to cut his hobby spending, and use the EXTRA money to provide Suzie’s braces, fix the car, AND fix the roof.
Arguing about the roof OR the car, without talking about his total contributions to the expenses of the household, is a waste of time.
I think public policy, especially complicated, fundamental government policies like taxes, evolve over time, and then only after much debate among competing interests.
And my experience as a lobbyist for 35 years has taught me that any time I ask a elected or appointed policy maker to support appropriating more money to any program, including the ETIC, I have been asked “How are we going to pay for it?” I either fib and say it won’t cost any money or I tell them to raise taxes.
This is the first time in my memory that a powerful public official has proposed that a program that gives taxpayer money to corporations and rich individuals be terminated and that same taxpayer money be given low income families is wonderful.
… the tax credit often does go to “corporations and rich individuals” it is not constrained to only go to those individuals.Oil company subsidies only go to oil companies. Wall Street breaks go to connected Wall Street brokers and hedge fund managers. The film tax credit goes to people who make movies. While there are many rich people in Hollywood who make movies, not everybody who makes movies is rich or from Hollywood.
And making movies is a resource intensive activity: there are many ancillary jobs like carpenter, electrician, hair, makeup, sound and gophers that come with the making of each and every movie. Boston already has many good and willing carpenters, electricians, makeup artists, hair stylists and gophers who would jump at the chance, and the paycheck, that comes with the production of a movie.
And many of those carpenters, electricians, hair stylists, makeup artists and what not, would say, to your face, and despite your 35 years of lobbying, that they would rather choose a better job, and more job security, over an increase in the EITC if it meant a lesser job and less job security.
The EITC is only a band-aid. It is a worthy attempt to deal with a situation and a condition that –one hopes— is temporary…. We should not prioritize the EITC above actually improving conditions for working people. They desire jobs before tax breaks. Yeah, they’ll take the tax break if they can’t get the jobs –as any of us would– but they’d all much rather have the better job than the better tax break. Hell, I’m inclined to give them both, but that’s just me
The fact that the vast majority of the credits (82% over the span of the law) are sold to financial services firms makes it clear that the credits do not benefit the people you claim are the beneficiaries.
The fact that non-Mass domiciled contractors for ancillary services get the credit is further evidence you are wrong.
And the further fact that a large part of the credit applies to well paid actors, writers and producer who do not pay the state income taxes, well, that just crushes your arguments.
For people who want to dig into a pretty technical 32 page analysis of the FTC, see the most recent DOR (2012) report,
http://www.mass.gov/dor/docs/dor/news/reportcalendaryear2012.pdf
but BMG readers should first read the MBPC report on business tax breaks generally to put this feeding frenzy into context.
http://www.massbudget.org/reports/pdf/business_tax_breaks.pdf
I enthusiastically agree that it’s wonderful … as far as it goes.
I think the rub is, as I said earlier, that when it comes time to fund the MBTA (or its replacement), what we’re going to hear from both Mr. Baker and Mr. DeLeo is “We’ve already done what we can, there’s just no more money”.
So I suspect that where we’ll land is that the film tax credit AND the MBTA will be dead, and the EITC will be increased.
What happens to all those recipients of the increased EITC if they have no way to get to work? If it goes down that way, will those EITC recipients think that government has succeeded, or will they think it has failed?
I think that those EITC recipients are smart enough to realize that the government has given them something with one hand, and taken away twice as much with the other. Meanwhile, the upper crust don’t care. They don’t use public transportation and they don’t have to get to work. Their drivers will get them to their private jets at Hanscom just like they always have.
That’s why I don’t think this outcome is “progressive”.
He’s probably still broke and exhausted from fixing up his house for his daughter’s wedding that didn’t happen.
Actually, no. Without a doubt, I think the the film tax credit is the single most offensive, asinine, absolutely BULL SHIT thing in the entire general or supplemental budgets — and it isn’t even close.
There are families struggling to feed their children, and we’re handing Sony and Warner Bros and other Hollywood studios $8 million to pay for Tom Cruise’s $30 million salary? Fuck that shit.
Seriously, we have more homeless people living in Boston than in Chicago, Houston or LA. Spending ~$100m a year on a Hollywood giveaway isn’t just a dumb idea, it’s psychopathic.
There isn’t a lot of up-to-date stuff, and there are a lot of holes in the existing data. Empirically, it’s very hard to come up with a definitive answer. A good question to ask, how many jobs does the credit create and how much does each cost? Theanswer for Louisiana was, 3,000 additional jobs at
a cost, at best, of approximately $16,000 per job in foregone tax revenue
The Mass Budget and Policy Center has some stuff, however, that informative:
Ninety percent of a company’s credits can be paid (refunded) to the production company even if the company pays no taxes in Massachusetts. Thus a company that spends $10 million in Massachusetts and pays no taxes in Massachusetts could receive a check from the state Department of Revenue for 90 percent of $2.5 million.
Did you really think it was just the Teamsters that were benefiting from the tax credit?
There is a tax offset, but the multiplier effect is likely far less than less than 1. The best evidence of this is from a Louisiana study, which both the MBPC and the FED cite, but the authors of both the say it’s very hard to determine the effect:
(It didn’t take 5 minutes to find this information.
But this brief article (on Georgia’s film credit) might shed some light on this whole matter. I’d be interested to hear more, if anyone is better informed than I am about this, and whether it does (or at least is thought to) apply to Massachusetts.
An unexpected bright spot for unions
Thanks for the article! It is interesting to see the growth of the film industry in Georgia. I actually noticed this just yesterday while watching Archer, which has a “made in Georgia” credit at the end of the show which I assume is required to access the credits.
I don’t have any of the detailed numbers in front of me to tell whether Georgia’s credit has been worth it (the cost to taxpayers, how much growth they’ve seen, permanent vs. temporary jobs, comparisons to other states, etc), but I looked into the program a bit and turns out they give a 30% transferable credit, in comparison to our already absurdly generous (imho) 25%.
Some may see this as a reason to hike ours to 35%, to pass Georgia and claim some future growth they would’ve seen, and maybe even some of their business. But I see that as just another step in an awful race to the bottom where the only real winners are giant production companies that can choose new locations for each project, not the workers who are probably unable to hop from state to state as easily (or the state governments footing the bill). I’d much prefer some kind of inter-state compact where we all just agree not to subsidize the film industry at all.
is filmed there too.
Purely speculation on my part, but my guess is that filmmaking is going to be less costly and less industrial in the future. It may be 30 years from now, but we’re already seeing web productions of shows being produced. My niece was an extra on a web production. She wasn’t paid, of course. The same with recorded music where we’re already seeing a lot of DIY. I don’t know how many people are making it big with DIY, but it’s only a matter of time before someone figures out how to capitalize on the latent talent out there.
I know Georgia. I’ve been to Georgia. I’ve worked in Georgia. I have friends in Georgia.
If I wanted to live where movie production is big business, I’d live in California. If I wanted to live where right-wing racists (some explicit and most not) bust unions, harass minorities, celebrate the “heroes” of slavery and the confederacy during the week, and then tell themselves and each other how right and godly they are during their well-attended Sunday morning Protestant church services, I’d live in Georgia (or one of its neighboring deep-South neighbors). Georgia is, after all, right next to Florida — in more than geography.
Georgia is an excellent illustration of why I chose Massachusetts as home more than forty years ago.