From CommonWealth editor Bruce Mohl:
The Massachusetts Revenue Department says the state's 25 percent film tax credit would not come close to paying for itself in terms of generating new tax revenues, even including economic multipliers.
In its analysis, the Revenue Department assumed $100 million in film tax credits would generate qualifying movie expenditures in Massachusetts of $400 million. The analysis indicated the film tax expenditures would generate at best $23 million in new state taxes, resulting in a net tax loss to the state of $77 million.
Hypothetical numbers were used in the analysis because not enough actual data is available yet, but the Revenue Department said the hypothetical numbers were consistent with the information on film tax credit applications obtained by the agency so far this year.
The analysis assumed $256 million in payroll spending, with half of the money paid to big-name stars and directors who don't live in Massachusetts and are unlikely to spend most of their salaries inside the state. The analysis also assumed that $20 million to $40 million of the movie spending would occur in Massachusetts even without the tax credits.
The Revenue Department plugged the numbers and assumptions into a model developed by Regional Economic Models Inc. and concluded the tax credits would boost the state's gross domestic product by $349 million and increase state employment by as much as 3,658, with as many as 2,963 jobs in the film industry and the rest in support areas.
The analysis concluded the movie spending would generate new income, corporate, sales, meals, room, and other state taxes of $17.9 million, or as much as $23 million if the state wasn't required to reduce spending to pay for the film tax credits.
The film tax credit analysis was contained in a letter sent May 19 to Rep. Steven D'Amico of Seekonk, a critic of the film tax credit who had requested the study. D'Amico said supporters of a bill that would offer a 20 percent tax credit to companies that build movie studios in Massachusetts were trying to push the bill out of committee before members could read the Revenue Department analysis.
D'Amico said the state needs to be make sure that any tax credits offered by the state generate tax revenue gains for the state. "This is corporate welfare for highly profitable corporations that are playing one state off against another," he said.