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Massachusetts lost $95.5 million last year, and is on the hook for another $250 million over the next two years, because of film tax breaks. The Bay State also has to make good on up to $130 million in tax credits in the coming fiscal year, and $117 million in the next, at a time when the state is facing a revenue free fall. That’s according to what the Boston Herald calls an “astonishing” report quietly released on the Bay State’s Department Of Revenue web site just before the July 4th weekend. The film tax break program has delivered only 15 cents in revenues for each dollar the state gave away to moviemakers. And, of the $289 million in wages paid on the productions last year, only 18% went to local workers. Presently, Massachusetts is building a proposed $500M studio in Plymouth. But some lawmakers want to put a $2M cap on how much a movie star’s salary can be used toward the credit. The DOR study is the most comprehensive look at the local moviemaking since lawmakers expanded tax incentives for films in 2007. But there are accusations that the Bay State DOR report was so gloomy because it was authored by ex-New Yorker film commission folks who used to compete with the Massachusetts locales. This is a really cutthroat biz these days.
Editor-in-Chief Nikki Finke - tip her here.
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Why is it that film financing is always dependent upon a sucker being born every minute?
Wow, hopefully that isn’t in the future for CA, that’s all we need is another few mill to add to our debt.
Why no source link? Pretty heavy cribbing without any new information added.
http://www.bostonherald.com/news/regional/view.bg?articleid=1182928
I had downloaded the 12 page report. Page 11 was very interesting in that the first year they actually had alot of productions.
Just think this taxplan is pegged as helping MI. One auto dealership can bring in 135 million in profits and that was a good year in Mass.
I used to cover the New England entertainment industry for the Boston Herald — coverage that included successive incarnations of the Massachusetts Film Office, anti-trust suits, theatre sales, investigations and indictments of local Teamsters who scared away producers, and even a proposed studio facility that the Teamsters were going to build to lure production to the Bay State (“Boy, I’ll bet THAT’S one construction job that’ll come in on time,” one LA producer told me). Tax breaks were a constant promise not fulfilled until years after I left my beat.
Several states in addition to Massachusetts have similar plans: Louisiana, New Mexico, New York, and Connecticut, among others. Tax subsidies are a positive program if they are applied to money spent locally rather than to overall budgets; this is the kind of inequity that bruised Los Angeles decades ago when studios intimidated city fathers to tax them on their budgets rather than on their profits.
It’s disingenuous to grouse about runaway production on the one hand and, with the other, flip the bird to a state whose largesse, however boondoggled, sends money back to California. In this regard, the Herald — a reactionary tabloid known as “Boston’s alternative newspaper” — is being protectionist as well as myopic, since their advertising department benefits from those same film companies whose financing their editorial pages assail. Doncha love it.
Tax incentives are a scam.
States give them in the hope of developing a new clean industry but the minute another state gives a penny more, studios flee there. There is no loyalty.
Tax incentives should be ILLEGAL. Period.
Unfair competition.
Don’t we clobber countries all over the world when they subsidize their industries?
We take poor african countries to court for giving farm subsidies to their poor farmers instead of buying our mosanto sprayed crops.
Why do we allow film subsidies?
And why are Unions supporting them?
Many Union members don’t even have the freedom to travel and work in whatever state they wish like the studios do. It’s welfare for the rich pitting middle class workers from one part of the country against middle class workers in another part of the country.
Ban them all I say.
Nikki, I hate to say this but your summation is as flawed as the original Boston Herald article (which you can read here, btw: http://www.bostonherald.com/news/regional/view.bg?articleid=1182928)
Massachusetts didn’t LOSE $95.5 million last year…it simply DIDN’T COLLECT this amount of money in taxes (the amount of money it would have received from film production IF the film tax credit law HADN’T been in place).
But it could easily be argued that IF the tax credits didn’t exist, then the volume of film production wouldn’t have been as high as it was in Mass. and, ergo, wouldn’t have created this so-called “tax-loss” to begin with (though neither would it have created the jobs and spending that the film industry brought to the state).
Yes, the fact that only 18% of wages were paid to in-state workers is something to look at (though I would argue that one needs to see above and below-the line wage breakdowns – as one movie-star’s salary could easily skew this 18% number and make it basically meaningless).
One also needs to quantify how much non-wage money was put into the local economy via film-production.
I’m a bit surprised that you would simply regurgitate a highly-slanted article from the Boston Herald. It’s very sloppy “reporting”.
If Mass. wants to revoke it’s tax credits, it can go ahead. It won’t have any more “losses” as IT WON’T HAVE ANY MORE REVENUE FROM FILM PRODUCTION TO BEGIN WITH.
Sorry to shout…but why is this so difficult for people to understand? Mass. DIDN’T LOSE MONEY, they simply didn’t collect as much as they could have if there weren’t any tax breaks for in-state film production.
This is the report that was done by the person that use to run the NY Film Commission which is the biggest competitor of Boston Film Production.
It’s like asking Coke if Pepsi is good for the economy.
Movie producers simply go where the tax incentive is currently the strongest in their favor. It has been a constant race to the bottom sold to local politicians under the guise that the incentive is “temporary” and that eventually it will be phased out leaving behind a vibrant industry and infrastructure that will then serve as the lure for movies. If this is true, then why has LA hemorrhaged jobs for the last 2 decades as movies were first lured to Canada by a favorable exchange rate and then back south to the states by ever expanding film tax credits. It’s funny, as soon as another state comes out with a better credit, whichever state has the current “best” credit sees business slowly dry up. It’s a transient business easily transported from place to place, why wouldn’t they go where the most money is being thrown at them. Half these states allow pass through companies that simply hire the equipment from out of state (Los Angeles/New York) and allows the production company to collect on the tax credit in equipment rentals as well. It’s stupid and shortsighted public policy at it’s best.
This is not news to anybody with more than half a brain. It’s the same logic that tells you the stimulus won’t work: government can’t create money by spending money in some perpetual motion machine.
Film tax breaks are just a form of corporate welfare that should be abolished, along with the rest of them. Any state stupid enough to bleed its coffers dry to subsidize an industry that pays its CEOs $50m a year is welcome to do so, but I won’t live there.
You have to make your tax breaks, just like a stimulus, work for you. Here in NY the system does add to the economy because they hire their crew here.
Essentially you have to be in a position so that most of it goes to employing people in your state, and that people will be working there long term. A week here and there with little local employment is probably not worth it. Six to eight months with a mostly local crew on a television series, and you are going to see return on your investment.
While I know there has been a race between the states about this, it would make perfect sense for a few of them to get together and institute an agreement that all of them would limit the amount of above the line salaries that would be eligible for the break.
Try this report, 500 extra per week for working 1.5 months isn’t a bag gig.
http://www.mass.gov/Ador/docs/dor/business/outstate/March_2008_Film%20_Incentives.pdf
What they’re overlooking is that skilled crew takes many years to learn to do their jobs well, so when the shows move, the LA and New York guys follow the work, and send their checks back to LA and New York to pay their mortgages and rents. Very little of the subsidy money goes to the locals because they just don’t have the experience to do the job. It’s really bad math to spend what the states are spending to subsidize temporary work, as no production lasts for very long. If the states were interested in creating real, long term employment, Hollywood is the last place they’d look. What states like Michigan are doing is no different than what Mexico did to the auto workers, underbidding the current workers’ rates to lure the industry away from it’s current location.
The tax credits should not be transferable as is the case in some states such as Connecticut enabling brokers to sell them and make a commission off the taxpayers.
Also at issue is that these tax credit programs in many states like NY are exempt from Freedom of Information Laws. There should be no secrecy over the details of this corporate welfare whatsoever. Where are the industry libs on this open government issue???
Oregon and Louisiana are doing quite well with their film production incentives. Maybe it’s just that nobody wants to shoot in Tax-A-Chussets.
PA and our union crews, hotels, and soundstages are cleaning up. I can’t go for a jog without coming across a new set.
The Mass Film Office Responds
The MA Department of Revenue (DOR) has reported that new direct spending on film and television production generated by the film tax credit in Massachusetts is $676 million since 2006. That figure, included in the annual report required under the film tax credit law, is over $100 million higher than the agency predicted in its March 2008 report. When DOR’s “ripple effect” multiplier is factored in, the total economic output tops $870 million.
http://www.mafilm.org/2009/07/06/dor-movie-spending-in-ma-is-676-million/
Every time an “article” about tax credits appears here, SOMEONE has to lament “runaway production.” While the readership here is not at all about every changing their minds about anything, I want to reiterate the main point … who knows, maybe one less person will stop equating “runaway production” with tax credits, when it is the guilds who force production to leave Los Angeles.
More specifically, producers of motion pictures are required to pay IATSE residuals of a percentage of gross receipts derived from distribution of that motion picture on television (free and pay), on home video (video and dvd), and in supplemental/ancillary markets (airline, train, ship). So long as a production does not shoot in the 13 western states and the production does not hire more than 1 IA member, the producers will not have to pay this.
That should be enough to send any production running out of Los Angeles. Now, once they have run away because of the unions, where do they go? THAT is where you can start discussing Tax Credits.
Cast & crew aren’t the only ones who benefit from movies. Caterers, lodging, rental cars – basically all of the local service industries which support filmmakers – get a giant boost in business when a movie comes to town. It’s like an extra tourist season, every business owner would kill for the money a movie brings to town.
Incidentally, eliminating local state tax incentives would only send the jobs to Canada.
It’s the same everywhere. Everyone’s a starfucker. And if you think you aren’t just wait until a “star” lets you think you can fuck them if you do so and so. The movie business knows its power and uses it to their best advantage. Everytime. Everywhere. And some of the biggest starfuckers are SAG members. That’s why the studios won.
Right now, MGM’s “Zookeeper” is spending enormous money in Massachusetts. From livery companies to voice over work done at local studios to the hotel that most of the crew is staying at, this production alone is bringing millions into the local economy. Most of the grousing in being done by people whose towns aren’t seeing money being spent by film crews…yet.
Also, while it’s true that a lot of the wages on films are being paid to outsiders, that is mainly because you don’t have a lot of costume designers and visual effects producers with the credits for big budget films living in Mass…yet. When Plymouth Rock Studios gets built, this could all change as 4000 new jobs are expected to be created in all aspects of production.
The naysayers in Mass need to realize that time and patience will bring more films here, and to start bitching now, in this economy, will only scare studios away from further investment.
Right, runaway production is all because the Guilds get paid so much. And particularly that big bad IATSE residual.
Sure you lose pennies on the dollar from DVDs and Videos if you move outside of the western states. PENNIES. And yes that can add up. But does it really add up to the thousands spent housing your leads alone? Their airfare? Much less the rest of the above the line team? Show me the figures, because it would take huge numbers to begin to justify that.
Can we please stop justifying craven greed on the backs of labor? During the height of the race to Canada the crew would have to work for nothing to make up the difference of the exchange rate alone. I’m sure that would make so many empty suits at the top happy as clams.
A large reason we are in the shape we are in America is because of the cheap labor meme. Newsflash to everyone blaming the labor, from IT to crews to background actors to teachers and nurses, firemen and police as to why this or that is wrong, look at the top before you keep blaming the people who have not effectively seen a real wage increase in thirty years while productivity has risen apace. Look at where the money really goes before deciding who is getting too much.
This country was stronger in almost all ways before everyone thought the biggest crime in business was to actually pay the people who do the work.
you (NY & WBTL) are absolutely correct. this game is a race to the bottom. yet another way corporate powers-that-be run this county’s production capabilities and resources (in ALL industries) into the ground. this is all a symptom of a nation and economy in decline. if we, the labor in this country stuck together and refused to go along (all of us) we could put a stop to this nonsense. I used to laugh at the general strikes of the entire workforce in France. It seemed like such outlandish behavior. well, I’m not laughing anymore. Labor in France leads a very nice lifestyle. They get great healthcare, they eat the finest food anywhere, they have time to actually see their families grow up and live an enjoyable life. They are also respected by their government and corporate leadership. They stick together across the whole country and put a stop to all the work and believe me, that gets results. Nothing is going to change in our country when the folks with the money can divide and conquer those with the skills.
@NY and way below the line — AMEN!!
I go crazy when I see the success of the PR geniuses who turned middle America against the working class and organized labor.
I was so angry during all of the bailouts when everyone was screaming that the UAW had to make wage concessions.
The average US auto worker earns about $1500 a week.
The average Managing Director at an investment bank earns $1500 AN HOUR!
And yet, I didn’t hear a single commentator scream about their pay. People got angry and shook their fists over the outrageous CEO salaries, but no one paid any attention to the fact that mid-level bankers earn $4-5 million a year (which works out to $1500 an hour for a 60-hour week), and we blissfully bailed them out.
Wake up! There is a war on workers in this country. If you still need to earn a salary to pay your bills, you are being screwed by the Capital Gains Crowd.
@ClearingStuffUp — I don’t know where your bitter, angry, misinformation comes from, but union wages are NOT what’s crippling this industry. It has a lot more to do with golden parachutes, sweetheart severance deals, and dozens of D-people in between the artists and the studio bosses (who are more bean-counters than filmmakers) turning good work into crap, then selling it for ten bucks a pop and wondering why people aren’t running back for more.
Here’s a simple equation — good movies make more money. If the studios went back into the business of making good movies (since right now it’s no one’s job to make sure the movie is actually good), we’d all be enjoying the bounty.
@working writer: great post! why are most people in this country so clueless about how they are being manipulated by corporate interests? honestly, what happened to critical thinking? follow the money folks, it’s not very hard to see who is benefiting from labor getting played against labor. notice how we have trillions to bail out Wall Street but, uh oh… no money left to bring guaranteed healthcare to all our citizens. hmmm…who is benefiting? better get off your couches and start insisting on your share. better stick together across state lines, industries, job classifications, etc. stop getting played like a fiddle for god’s sake. it’s embarrassing.
Toward the end of the MA report there was a table (9) that showed a list of states supplying subsidies and the return on their investment.
Here are the details:
State / return on $1
LA (2005) .17
CT (2008) .07
PA (2008) .24
RI (2008) .28
NM (2008) .14
MI (2009) .19
LA (2009) .13
PA (2009) .28
MA (2009) .14-.16
And then two studies done by Ernst & Young who found that NM and NY earned $.94 and $1.10 respectively.
Curious how E&Y always find financial alchemy in film subsidies while the state reports uncover a boondoggle. I wonder why that is?
Whatever the case, it would be hard to argue that film subsidies have done anything other than drive wages and working conditions down all over the country. Yet the very cast and crew members who just had their wages decimated and their residuals taken away continue to gladly lobby their legislators for greater subsidies, thereby picking their own pockets yet again.
It’s time for us to stop greasing the wheels on the race to the bottom.
The Massachusetts Film Incentive Program?
Disinformation and misinformation are running rampant, fueled by the Boston Herald. First correction, that $2mill Salary cap was rejected by the Governor Patrick back on June 29, 2009.
I work as an Entertainment Attorney here in Boston and have been involved with the Tax Credits from the start (filing Applications, selling the Credits).
The Program is a phenomenal success for outside Producers. When done correctly, Producers can see fat cash in the bank right just in time to cover Post – and that’s Producers from Boston, LA or Mumbai.
The other great Beneficiaries are the Taxpayers, who can pick up the Credits and satify their Mass Tax bills at a disount.
The Program is new and growing. I would encourage some slight policy shifts towards building local sustainability (to encourage local Writing, Development, Financing).
Nicky and others – I am here if anyone wants to really know what’s happening here on the ground in Massachusetts.
Emily McNamara, Esq.
Emily@EmilyMcNamaraEsq.com