Rep. deMacedo opposes plan to cap film tax incentives

By Emily Wilcox
GateHouse News Service
February 17, 2010

PLYMOUTH — Connecticut offers a 30 percent tax credit for filmmakers who opt to shoot in that state. Michigan offers 40 percent.

The Massachusetts Production Coalition contends that, since Massachusetts adopted a 25 percent tax credit for filmmakers who film here, Massachusetts has garnered more than $1 billion in new economic activity.

Now the governor wants to place a cap of $50 million on the tax credit – an action that Rep. Vinny deMacedo, R-Plymouth, and movie experts say will likely kill the industry in this state and send it packing to others with better incentives that don’t change from year to year.

“Just two years ago, the governor expanded the movie tax credit,” deMacedo said. “It’s the inconsistency in tax policy that is most frustrating to business. It sends a terrible message to any industry that we offer tax incentives to.”

A UMass Boston study released last week confirms that Massachusetts has one of the fastest growing film industries in the nation. The study notes that jobs in the film industry have increased from 536 in 2006 to 1,807 in 2008.

The state’s tax incentive program was adopted in 2005 with the first set of incentives taking effect in January of 2006. The program was aimed at luring a lucrative industry, with the median annual salary of $67,000, to help boost the state’s economy. While the producers get a tax break for filming here, Massachusetts reaps the benefits of the economic boost the filming spurs as film crews spend money to live and work here, hiring local professionals and boosting local sales. The UMass report estimates that filmmakers have spent $247 million on fees, hotels, housing, transportation, food and set construction here since 2006.

And, according to the Journal of Travel Research, tourism increased as much as 75 percent in locales featured in a successful film.

The UMass report, conducted by UMass Boston Management and Marketing Professor Pacey C. Foster and Economics Professor David Terkla, contends that the multiplier for the film industry in Massachusetts is $1.95. Translated, that means that for every tax dollar spent, the state, overall, reaps $1.95.

“The employment multiplier of 1.79 can be interpreted to mean that a new job generated in the film sector produces .79 additional jobs in the commonwealth,” the report adds.

Executive Managing Officer of Rock Entertainment and former Paramount Pictures President David Kirkpatrick said capping the tax credit at $50 million will likely reduce the industry in Massachusetts to one film per year, or, even more likely, to none at all. The average movie costs $75 million, he added; many cost significantly more.

Plymouth Rock Studios chose Massachusetts for its movie studio development because of the tax incentive. Placing a stringent cap on them will likely send the industry packing, he added.
DeMacedo agrees.

If Massachusetts were to implement such a cap, he said, the state doesn’t just lose the millions in new business the industry generates, but it will lose the industry completely. Hollywood will simply go elsewhere, to other states like Connecticut that offer an even great incentive.

But deMacedo said the governor’s proposal has ever more sweeping consequences, as other industries will look askance at a state that implements a tax incentive only to withdraw it a few years later. Massachusetts is currently offering the biotech and life science industries similar tax incentives, he added.

“The message you’re sending to the biotech industry is that the administration may, 18 months from now, change its mind,” deMacedo said. “The message is we don’t know what the tax policy is going to be from year to year. Thus, you cannot create long-term investment in the Commonwealth of Massachusetts. If you continue to change tax policy on a whim it sends a terrible message to every industry.”

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