April 08, 2009 Now that the curtain's being opened on Michigan's tax incentive package to seduce Hollywood types it's becoming clear that the spotlight is dim for the real economic impact and job market—or lack thereof—on the state.
The tax break approved last year allows filmmakers to fund up to 42 percent of their production costs via our tax dollars. While that's great for enticing producers to take advantage of Michigan's scenic beauty and varied natural and urban landscapes, the state's taxpayers come up short in the deal.
According to The Tax Foundation (www.taxfoundation.org), "...the state hopes that in-state filming will boost sales and property tax revenue by $17 million in 2009, (but) the credits themselves will cost $127 million in lost business tax revenue." The reason? If at the end of it all a company receives more credits than taxes owed, they'll get a check because the tax credits are refundable.
What's worse is taxpayers are funding film projects with no guarantee of permanent economic growth for the state. Jobs may be created during the filming process, once it's a wrap the jobs may wrap up as well. This may be why Sen. Jud Gilbert proposed a bill that caps taxpayer payouts under the film incentive package at $50 million (currently there is no cap). Gilbert wants to put a strong emphasis on creating Michigan jobs and Michigan workers before handing out unlimited funds to the film industry.
It's unfortunate that these critical items weren't considered before opening the curtains on what could turn out to be a big boon for Hollywood but a big bust for Michigan taxpayers.