The Department of Revenue’s report on the state’s film tax credit is generating wildly different reviews. The Boston Herald headlined its story “Follywood”, and the Boston Globe said the report indicated “taxpayers are not getting their money’s worth.” But the Massachusetts Film Office said the $676 million in movie spending over the last three years “exceeds expectations, at no cost to Massachusetts taxpayers through fiscal year 2008.”
Both the Globe and the Herald seized on the fact that the state was getting back roughly 16 cents in tax revenue for each dollar of tax credits issued. But the Film Office chose to look at the statistics from a different perspective: It tallied up tax credits ($167 million), tax revenues ($26 million), and the most optimistic estimate of economic activity ($870 million) and concluded that the state is spending 16 cents for every dollar of new economic activity generated.
“The report shows the film tax credit is a good investment for Massachusetts — creating thousands of new jobs and infusing much needed spending into cities and towns across the Commonwealth at a time when it is desperately needed,” said Joe Maiella, president of the Massachusetts Production Coalition.
No one is misquoting the report. They’re just picking and choosing which numbers they use to buttress their analysis. They are filling a void left by the Department of Revenue, which issued a report full of numbers but very little analysis or interpretation.
A major conclusion of the Revenue Department report was that much of the movie money flowing into Massachusetts was going to out-of-state residents, especially highly paid stars, directors and producers. The report said $177 million of the $429 million in wages that qualified for tax credits went to just 36 individuals.
The Massachusetts Film Office chose to emphasize the fact that 62 percent of the 3,117 jobs created as a result of the film tax credit went to Massachusetts residents, and that the median annualized wage for those jobs was $67,775. All true, but the Revenue Department report also noted that median annualized wage estimates are subjective because most film industry jobs are short-term in nature.
“All direct film production jobs estimated in this report are temporary and cease when the productions end,” the DOR report says. “This makes film production incentives that support such jobs difficult to compare to other incentives, which are intended to generate permanent employment, while film incentives by their nature need to be renewed indefinitely to sustain employment at the estimated levels.”
The Film Office also made the case that big stars have a major economic impact on Massachusetts.
“When Leonardo DiCaprio or Kevin Costner or Bruce Willis choose to work in Massachusetts, they live here while they are working,” the Film Office said. “They spend money here while they are living here. And, most important, they pay taxes to Massachusetts on all the money they earn here — not just while they are working but for years to come on all residual income they earn from that project.”
The Film Office added: “Stars also validate the local industry for major private investors. Does anyone seriously believe that the four different groups currently planning to spend over a half-billion dollars in Boston, Lowell, Plymouth and Weymouth (on the construction and operation of new state-of-the-art sound stages) would be investing that money in Massachusetts were it not for the frequent presence of big stars living and working in our state?”
