Film tax credit means business

By Rep. John Keenan and Rep. Charles Murphy
Letter to Editor
Boston Business Journal

A common misconception about the film tax credit (which appeared most recently in a BBJ editorial) — that film companies are getting a “free ride on taxes” — is completely false.

Before a single tax credit can be lawfully issued in Massachusetts, companies must not only spend their money in our state, but also pay state taxes. These include income taxes, meals taxes, gas taxes, and hotel taxes—just to name a few. These same film companies also pay local taxes and fees.

For example, Adam Sandler’s company is currently shooting a pair of movies in Massachusetts. The first film made a payment of $150,000 to the Town of Essex. The second, contributed more than a quarter million dollars to the financially strapped Franklin Park Zoo. They are just two of the films shooting here this year. We’ve had more than two dozen major films paying taxes and fees in Massachusetts since 2006. And even though many of the stars of those movies live out of state, they are required to pay income taxes to Massachusetts—not only on their big salaries, but also on all residual income they’ll receive for many years to come!

For evidence of the success of the program, one need only look to the most recent report from the Massachusetts Department of Revenue. DOR calculated economic output generated by the film tax credit to be $870 million over just the first three years. And the cost to taxpayers for all that economic activity–as of the end of FY 2008? Zero. That’s right. During the first 3 years of the program (according to DOR), the state actually collected $3.6 million dollars more in taxes than we paid out in redeemed credits. Now that’s real economic stimulus!

Rep. John D. Keenan (D-Salem) is House Chairman of the Joint Committee on Tourism, Arts & Cultural Development. Rep. Charles A. Murphy (D-Burlington) is Chairman of the House Committee on Ways & Means.

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