It’s looking like the film tax credit is going to be with us for quite a while longer. Last year the Governor’s idea of scrapping it altogether in favor of a tax credit for working poor families met with very stiff resistance from film tax credit fans. This year his more modest plan to prune it back to its Romney-era size (in part by imposing a cap of $7 million per movie and by eliminating the option to sell the credit) hasn’t really been heard from since its January launch.
But if we can’t stop this perpetual train robbery, we can at least learn where the money is going (h/t to Jamie Eldridge and other members of the Senate who succeeded in getting us this window to peer into). In 2014, the most recent year for which film tax credit information is available, one very big winner was Massachusetts native Mark Wahlberg, the star of Ted 2, which was filmed here that year. (If, like me, you haven’t caught Ted 2 or the original Ted yet, Wahlberg’s co-star is an animated bear and both stars’ vocabularies are largely scatological.)
We taxpayers ponied up $14 million toward Ted 2‘s production costs. For that money we could have paid for upgrades to 30 subway cars to extend their service for the better part of a decade or funded a year’s worth of rental vouchers for 2000 homeless families. So far, Ted 2 has taken in over $240 million in box office and video sales, an amount that ought to reassure investors in Mark Wahlberg’s next Massachusetts venture that the film tax credit is not strictly necessary to its commercial success.
And as we were particularly reminded this past Monday, Mark Wahlberg’s next Massachusetts venture is already in production. Opinions vary on whether it’s too soon for a movie about the Marathon bombing and whether a Marathon bombing movie made by Mark Wahlberg will ever be appropriate, but come December, we’re going to have one called Patriots Day. Wahlberg and his production company at CBS have tiptoed around the movie’s possibly explotative nature and have offered a solemn but indefinite vow to “get it right.”
Apparently getting it right does not include respecting the wishes of any 2016 Marathon runners who don’t care to appear in the movie.
Here’s an idea. If the Patriots Day folks are really interested in getting it right, they could announce that they’re making this movie on their own dime and won’t ask us taxpayers to chip in a quarter of the production costs via the film tax credit.
I’ve seen it in stores filming for TV ads and other public areas used for filming movies. Granted those environments are often indoors and by definition more controlled, but if you’re outside I’m not sure you can ever guarantee you won’t be filmed.
Regarding the tax credit, what would supporters say the benefit is? It seems to me that tax credits or breaks should be used only if there is a reasonable chance that money will be recouped elsewhere. For example, it might make sense for the film industry if the difference can be made up by taxing the incomes of jobs that will be created, the taxes on purchases by people who would not otherwise be in the state, etc.
help make America great!
If you’re the only state doing it, then it’s great. If everyone else is doing it, then it’s an uncoordinated giveaway to business, which is what it’s become.
Everyone is doing it. Seems coordinated.
What do the states get in return for giving away to businesses? If the answer is they bring business here, OK, but only if it more than replenishes our coffers.
and “respectful” are very different things, especially when not everyone would see that sign — and about 14% of our population would be incapable of reading it.
Plus, “any use whatsoever” and “in perpetuity” are also both pretty loaded terms, and may not exactly line up perfectly with legally/constitutionally-granted rights to use material filmed in public.
And, quite frankly, there is a real compensation issue here — why on earth should we let Mark Walhberg’s film make millions off the images of marathon runners and fans in attendance without compensating them? Or even providing people with proper consent that their images could be used to make Mark Walhberg millions? (And I’m sorry, but those signs aren’t proper consent.)
If some fan or runner ends up being displayed prominently in promotional material, it could make Mark Walhberg millions and the fan or runner nothing, even if the person who’s image was used had no choice in the matter. In fact, count on that happening.
So… no… sorry — Marky Mark should never have been allowed any special access to film there and then. He should have had to get extras to make this scene, who could be compensated for their work or at least work with full consent, not prey off people who may very well find his movie as opportunistic, disrespectful and tasteless as many (including me) do.
The film tax credit doesn’t at all work the way you think it should. Studios don’t have to hire Massachusetts workers, and because of that, there’s no incentive for them to develop a base of people to hire in Massachusetts for when they’re filming here. They hire people from where the studios are located, ship them in to film, then ship them back out as soon as they’re done filming. So, very, very few people who are hired to crew these movies are Massachusetts residents paying Massachusetts property taxes. It’s not zero, but it sure is pretty damn close to it. Also bear in mind that these films are exempt from paying Massachusetts sales taxes, and most municipalities will give all kinds of goodies to the studios to choose their town/neighborhood to film in, to the point where it often costs the city or town more than what they’re paid by the studio (if they’re paid anything at all). I’ve even read of cases where police details were provided by towns for free.
Since Marky Mark is so proud of being a local, you’d think he could see his way clear to spend some of the $14 million on free tickets for the 5 or 6 MA residents who wanted to see Ted 2. I guess he didn’t do that. Maybe he was afraid one of them might be of Asian heritage; we know how he feels about them.
As for his new project, I think it will always be too soon for a Wahlberger film about the Marathon bombings. I have no doubt it’s going to be one long pander to the Rudy Giuliani crowd.
I think a distinction should be made between “ponying up” (a check cut) and “tax credit” (which presumably means the film paid taxes, but less taxes).
So if the state budget is $100, and the film is taxed at $20 with a 25% tax credit, then the state is at $115. If we pony up the 25%, then we’re at $95. A film tax credit is still a gain.
Or am I completely wrong about this?
I get that the tax credit is controversial, and it might be high, but on balance I think we gain from it. OF COURSE the money could go to other things. That’s true of every dollar we spend. But it’s also true that movies would be made elsewhere (Toronto should win a lifetime achievement Oscar for the number of times it’s pretended to be New York), so we are getting something. It’s a legitimate investment that people of good will can disagree about.
Unlike a lot of tax credits, the film tax credit is both refundable and transferable.
As a result, the film company gets 25 percent of its production costs back from the state. Some portion of that refund goes to pay the taxes the film company owes (although since we also kick in an sales tax exemption for making movies here, those taxes are even less significant).
Let’s say a film company spends $10 million. It gets a tax credit of $2.5 million. The film company pays what taxes it owes with that $2.5 million, then it can get 90% of what’s left in the form of a check from the state (refundability), or it can sell the tax credit at market rate to another entity that does owe state taxes (transferability). The market rate for transfers is around 90 cents on the dollar. If the film company transfers its credit, the purchasing entity gets a 10 cents on the dollar discount on the taxes it owes the state. When the tax credit is transferred, in other words, state tax revenue is also out the discount that went to the purchasing entity.
The Massachusetts Film Office, whose job is to lure filmmakers to the state, explains the wonders of our tax credit here. I left some out.
I agree with your point that most movies could be made elsewhere (and with the other race-to-the-bottom comments in the thread). Patriots Day is a likely exception — where else could it be made, realistically? Which is one reason I hope that the movie is not a pander to the Giuliani crowd (thanks, Kirth) and why I think it would be nice if this film company’s desire to “get it right” included not claiming the film tax credit.
Does it apply to independent films as well? Can I make a movie for $100,000, and get $25,000 back?
it looks like you can play starting at $50,000.
Let’s make a BMG documentary.
who band together and against all odds convince Mark Wahlberg and CBS not to claim the film tax credit! Villagers rejoice, etc.
I can get you a group rate if you buy the pitchforks in bulk. Torches are cheaper by the dozen. Adam Smith rules as they say.
I’ll give money for that kickstarter.
And as long as we make sure it costs $50k, the state will pay at least $12,500 of it!
Noooooooooooooo.
Therefore, by the BMG code, it must be a good thing.
Regardless, it’s never going away. Thank YOUR legislature and stop kvetching about it.
Conservatives need to stop thinking only their tribe is legitimate. Obama can be a legitimate president, even though he’s not a conservative (or even white!) And the Massachusetts legislature can be YOURS even though the people who dominate it don’t think like you do.
Tinpot dictators and their fart-catchers delegitimize their opposition. Patriots respect and compete against it.
This is BMG. I get the concept, but this is a hyperpartisan blog and the Democrats have a supermajority.
If we were hyperpartisan we wouldn’t put with you. 🙂
Or that UIP guy for that matter.
I still think most people on this blog are very closed minded.
You know my name is James lol
…I believe it may have even been by one of our editors, praising Baker and calling out the legislature on this one. We’re not THAT simplistic and partisan.
Just like any post calling out Baker for being against something that many Dem leaders agree with him on, such as the pot or transgender bills.
Why waste time on this post at all?
This is not the first time you’ve made this specific complaint, and not the first time you’ve rejected any responses to it.
It therefore makes me wonder why you bother to waste time on this particular topic at all.
That’s the point. It’s not going to go away.
but the legislature doesn’t. So what if we know where the money goes?
I agree with you that Mr. Baker would like to end it, and the legislature balked. I think it’s more complex than that, because it is very difficult to focus on a specific item in a budget proposal to the exclusion of others. Still, I think your point stands.
I guess that we “waste time” debating the film credit for the same reason that we waste time debating the primary candidates long after the results of the Massachusetts primary have been counted.
I have some faint hope that our discussions here, especially concerning national issues, are read and cited widely enough that they may in fact have a positive impact on public policy.
She’s going to win the nomination and she’s going to win the election.
He doesn’t have much future in the party (as he’s not really in it).
The more interesting question is whether the party is actually moving left, but Hillary’s going to be running for reelection in 2020, so probably not.
Change in control of Congress is interesting, but it’s a little early to make to discuss that without it being just a guess.
Truthfully I’d vote for Bernie over Hillary.
if that’s what you mean.
I’m sure many of the editors have praised something about Baker at some point, too.
When there is some stupid wasteful policy such as this, you have to retroactively re-interpret and transform facts in order to make it the governor’s fault. Try, “well, it doesn’t matter that the governor was opposed to this stupid tax break. The GOP as a whole set an anti-tax tone nationally, and that’s what caused our Democratic super-majority to quaver and maintain the tax break. Did Gov. Baker denounce Grover Norquist today?”
See also: MBTA, casinos
In fact, hasn’t BMG code meant “deep frustration and disappointment” of the legislature from the start?
If someone comes on here and trashes Baker, no one says anything except for myself and PP, maybe sometimes a random comment from someone else. Baker gets tagged with imaged intent all the time “wants to gut regulations” when there’s no evidence of a plan.
Some people can write the craziest most partisan things and when they are on your side, they get a pass.
The frustration with the legislature is funny. Only DeLeo’s district get to vote for him as a Rep. The people you all love vote for him being Speaker, and now Speaker for Life.
Never voting Republican limits your options and gets you nothing. I vote Democrat at times. This is a partisan blog and when you always lean one way (MBTA needs more money! It can’t be the workers fault! Beverly Scott is a hero!) it prevents substantive solutions from being discussed.
I would say always voting Democratic limits your options. Where I disagree with you and porcupine is your insistence that this poll following lightweight is a serious policy wonk or that we should replace DeLeo with the likes of Jim Lyons.
And Deval was a largely ineffective governor too, so it’s not a partisan observation. I think Baker and DeLeo are equally lousy and the vast majority of the liberals in the legislature are either stuck on the backbench or in so deep with leadership their votes are identical to DeLeo’s. And don’t get me started on Mahty, Boston’s Blago.
Just because this community doesn’t wholeheartedly support the Governor doesn’t mean it wholeheartedly supports the legislature. Far from it.
It seems to me that you’re largely projecting your own views onto others.
I think most commenters on BMG would agree with me that both Governor Baker and the legislature, as a whole, are serious problems in this state, and that we’d like to see some huge changes from both branches. I can only speak for myself, of course, but I think the view is widely held on BMG that there’s an intractable leadership on Beacon Hill that isn’t representative of the Democratic Party and doesn’t work in the best interests of the people of this state — and it’s something many of us are working hard to change, even if we haven’t yet discovered a particularly effective way of doing it yet.
This statement alone has two huge problems — you say “the people,” presumably referring to the legislature’s Dem majority, as if it was one giant amorphous group that all thought the same, and “you all” as if BMG’s community was similarly flawed.
Both are far from the truth. It doesn’t seem to me that you’re trying very hard to try to put yourself in someone’s shoes — but are awfully quick to group everyone you oppose together as somehow bad.
It’s tribalism at its worst, and it’s wrong.
Don’t leave that part out.
If we can give tax relief to companies for locating here, pretty standard throughout the country, we can give tax relief to film makers. The problem is business people seem to negotiate better than our elected officials.
Why can’t we attach a provision to the contracts where the state gets a percentage (0.5%) of the profits for a particular film. Ted + Ted2 made a bundle.
This was true on the GE deal, as the released emails fully show.
providing 25% of the costs and only reaping .5% of the benefits?
Okay…. let’s run that math.
Ted 1 cost $51 million to film (after the tax credits) and probably another $25-50 million to market. It “made” 550 million total, but that’s not what the studios made. Studios make about 50% of the domestic box office figure and 25% of the international figure (and I’m being fairly generous here, especially internationally where it can be as low as 15% after expenses and currency issues).
That’s about $110 million domestically and $83 million in foreign offices, without subtracting production and marketing costs.
And without subtracting production or marketing costs from studio profits, your 0.5% would have “earned” MA about $1 million on a movie that cost Massachusetts about $13 million to make.
And this was a film that was a runaway success!
Ted 2 — which was not a runaway success — would have “earned” MA about $370k off of the roughly $17 million we spent on it, if the film earned anything at all (after production and marketing expenses were accounted for, were I a betting man, I’d say the studios may have even lost money on Ted 2 — even with the tax credit).
Worst of all, I think your idea would be a nonstarter. The special interests who pushed to get these cushy deals and have protected them aren’t going to be much interested in having the studios pay back the state in any dollar amount, and all too many politicians elected in office think the state earning money off of a ‘private’ deal is anathema to American capitalism, even when the state contributed considerably to the expenses of that business deal.
We’d have an infinitely better shot of killing the tax credit (or capping dollar amounts for individual films) than making the Commonwealth of Massachusetts a successful Hollywood investor.
I’m not disputing it, just wondering. I didn’t know we got any profits back. It seems like 5% would be more reasonable. That still makes the subsidy really generous.
They’re round, approximated, but sound. The 50% of domestic box office and 25% of world wide aren’t made up out of thin air. Distributors get huge chunks of change, especially internationally. Hollywood used to get massive chunks of the opening weekend numbers domestically, but that largely changed when so many movie theater companies started going belly up and declaring bankruptcy.
We don’t get any profits back. Scott suggested it as an example of a better way to do it, and threw out the .5% figure.
It was a good example of an idea that sounds good, but isn’t once you really look at it.
Even at 5% — which would never happen in a million years because of all the people who would decry the horrors of socialism (and lobbyists who would never accept it, fearing the precedent that would be set) — the state would still have lost money on Ted 1.
People really have no idea, but Hollywood studios don’t get nearly as much money from the box office as they’d think.
If the state took 5% of the studio’s profits on Ted 1, it would have ‘earned’ about 9.65 million on a 13 million investment, without subtracting production and marketing expenses. (So, the actual number the state would earn would be less than 9.65.)
Now, maybe that’s not such a bad loss for the intangible benefits of having Ted 1 made here… it was popular, got Boston’s name out there, and I’m sure residents liked going to see the production.
But bear in mind that’s with a movie that’s a runaway success. If the state couldn’t break even earning 5% of the profits on a film that was a huge hit, think of how poorly it’d do with any other film. If we’re going to invest in 25% of whatever a film costs to produce when it’s filmed here, we should get 25% of the studio’s profits. That’s a policy I’d support.
Otherwise, if we want big movie and TV productions in MA, let’s just hand WGBH $100 million to make 3-5 shows a year- and make sure we get the DVD/streaming money back to help replenish the fund. Much more bang for the buck, no worry about paying for 25% of Tom Cruise’s $30 million salary, and we could create content for underserved communities and not mostly gangster movies that make it seem as if Boston hasn’t changed since the days of Whitey Bulger.
While it wasn’t as good as the first one, artistically or financially, Ted 2 still brought in more than triple it’s 85 million budget (Forbes). Since we’re a gambling state the idea is to let the state in on some of the action. We’re giving the tax breaks anyway, just make the deal better for the state. And maybe 5% would be better, just start with 0.5%. You can always start to screw the users later when the idea is established, our politicians should be able to do that.
Brought in to whom? Hollywood studios? Nope.
The distributors take 50% of the domestic box office and about 75% (!!!) of the worldwide box office.
Ted 2 made $81 million at the domestic box office. Of that, the studios would get about $40.5 million. It did very respectably in foreign markets, making about $135 million — but the studios only see about 25% of that (the percent of foreign box office that studios bring home can vary widely, but 25% is a very fair estimate). So, you’re looking at Hollywood’s share of that foreign haul being about $34 million.
It’s marketing expenses were probably around $40 million — marketing for a film is generally about half of what it cost to produce.
Because Ted 2 bombed at the domestic box office and its only modest success was at the foreign box office, where it receives a generally paltry sum of the pie, the film was probably only just breaking even for the studios on its release, and may have actually lost money until it hit DVDs/streaming.
A movie making triple it’s production budget is generally about when it becomes profitable for a studio, but not always when it fares poorly at the domestic box office and most of its success is overseas.
“some of the action” = virtually nothing?
Look, if you were a billionaire and the world’s best poker player came to you and said he’d give you 0.5% of his earnings if you loaded him 25% of his costs, would you take that deal? Well let’s just say that no one on Wall St would, that’s for sure.
But in MA, the deal’s even worse. We’re not fronting the best poker player in the world in this metaphor. We’re fronting *any poker player who walks in the door.* If the world’s worst movie producer, with the world’s worst script came into Massachusetts and filmed his or her movie here, we’d pay 25% of those costs.
Dear god, if we’re going to be a gambling state, we better learn how to freaking count the odds and understand fair, and should take Wall St’s approach to earnings when our money is the one that’s put at risk. It’s taxpayer money — never forget.
who writes for Forbes (and has covered the film industry 20+yrs) would disagree with your evaluation of the film. Solid middle of the road performance. Anyway,
Do you disagree with all tax cuts for all businesses? Pull the GE deal? Schilling pulled a fast one on Rhode Island ? Then I will see your point.
Whatever happened to Evergreen solar?
His sub-headline on Ted 2…
…materially sounds an awful lot like what I described.
While I did describe that as “bombing” and he takes a more measured tone, our only real disagreements — in my eyes — are semantics.
Do you mean tax credits? If yes, almost. I hate the prevalence of tax credits today, and I hate the way most of them end up being set up. But I think there are good tax credits — but nothing that even resembles the deal that the GE got.
One thing I’d like to see, though, is fewer tax credits going to big businesses and more of them going to citizens. Evergreen Solar’s credits were a massive failure because the company went under. The Bay State’s tax credits going directly to people to put solar panels on their roof, however, were an astounding success — and all people have to do is go outside, drive around a bit and look at how many houses have solar panels now to realize that.
Tax credits going to businesses are a roll of the dice at best, and are all too often horrifyingly corrupt, special-interest bought colossal wastes of money, like the film tax credits. But tax credits going to people that provides a carrot for them to do something good for not only their families, with a real societal benefit? That’s fantastic.
And it’s no small wonder that Beacon Hill has done its darndest to kill the solar panel tax credit, while it vigorously defends and protects the film tax credit from even the most modest reforms that could be designed to make it make it make more fiscal sense or be more effective at one of its primary purposes (create MA production jobs, which it fails spectacularly at).
Special interests want the film tax credit, even though it doesn’t make any kind of fiscal sense. Special interests don’t want the solar credit, even though it’s been a tremendous success at growing local jobs, saving families money, helping the state meet its CO2 emissions obligations and helping us avoid the need to build big and costly new energy plants by reducing strain on our state’s plants during peak energy times.
Just for the record —
I’m all for some small, targeted tax credits to help people start a local business. I’m all for some tax credits to help kick-start economic growth and development in regions that desperately needs it.
But I’m not for giant tax credits going to help huge, mega-profitable corporations open up shop in some of the most sought-after real estate in the world.
I love that the GE moved here. I think it would have moved here even if they didn’t get the unprecedented package of goodies awarded to them, because they clearly wanted access to Boston’s brand and intellectual capital more than anything else… but even if the GE said no thanks, it’s not like there is any lack of corporations and startups that want to open up shop in the Seaport. Whatever would have taken the space that the GE will now take may not have had the brand cache of the GE, but they would have been good jobs nonetheless. Maybe I wouldn’t have been up in arms with that kind of package if the GE was putting their HQ in downtown Springfield or New Bedford, but not the fracking Seaport.
I see your point. Wish we had politicians who didn’t cave to special interests.
… just a hint — the merest soupcon– of snobbery? ?
One might be forgiven, after reading this diary, for thinking there exists appropriate movies and appropriate movie stars and that maybe the film credit wouldn’t be so bad, perhaps even be acceptable, if Sir Richard returned from the great beyond to film “Gandhi II, the Mahatma-ing” on the Commons. Anything so long as that ghastly Mark Wahlberg doesn’t profit.
And the fact that the film may not even profit? How horrible. One can also be forgiven, after reading this diary, for thinking that every other industry is taxed on its outcome (somebody should tell that to the baker who bakes a loaf for 10 and a half cents and sells it for 3 dollars… boy-0-boy are they in for a surprise!!)
And then he goes and dares to film marathoners for a film about a marathon! The very nerve of him.
Oh, wait!! The film payroll credit doesn’t extend to salaries in excess of 1 million dollars! So Mark Wahlberg, who was paid 7 million dollars for Ted (and presumably a similar amount for Ted 2) has nothing to do with this… And Mark Wahlberg has nothing whatsoever to do with CBS Films, the company making Patriots Day other than, presumably, to be employed by them with a nother seven figure (fully taxed) salary…
… oh, well, then… carry on. Nothing to see here. It couldn’t possibly — therefore — be snobbery.
covers all production expenses, including salaries, while filmed in MA.
Many people tried to cap how much could go toward any individual’s salary during the Patrick administration, but that effort failed miserably as I recall it.
Feel free to provide a link to correct my memory, but I don’t think I’m wrong. So long as the big star resides in MA while working here, their salary — as I understand it — is covered by the tax credit. (That does mean they’d have to pay MA state taxes for the portion of time they lived here while filming, and I hope the MA Department of Revenue is vigilant about that.)
…high salary exception
… high salary exception… is for the payroll tax.
The production costs do include the high salary wages, but that credit goes to the production company and not to Mark Wahlberg, which was my point.
Does it matter who gets the payroll tax? The point is that we’re paying the tax credit on the high salaried employees, which is a considerable amount of money for no real economic gain for the state.
Also, for anyone reading the link you provided who found it confusing, I thought this was a clearer explanation, if not crystal clear. (The “why” alludes me.)