The Massachusetts Film Tax Credit
State policy can help build an economy that works for everyone. With high quality education and training opportunities for all, and with functioning core public structures like a reliable transportation system, our entire economy grows stronger. States can also support families across the Commonwealth by setting a fair minimum wage and establishing other policies that improve working conditions and help ensure that everyone who works for a living can afford to pay for life's basic necessities.
As part of our efforts to grow the economy, our state spends close to a billion dollars a year on special business tax breaks. We have no process, however, for systematically assessing this type of economic development spending against our goals. Special business tax breaks apply to specific industries or reward specific activities. In many cases there is no evidence that they are a cost effective way to achieve legitimate public purposes. Yet these tax breaks live on from year to year, partly because - unlike items in the state budget - they are not subject to regular scrutiny through the annual budget process.
Our new factsheet, The Massachusetts Film Tax Credit, describes one of the state's most generous tax breaks. This program provides movie producers with a tax credit of 25% of the cost of making a movie in Massachusetts, meaning that if a company spends $20 million shooting a movie here, it receives a tax credit of $5 million. If a movie star is paid $10 million, the state reimburses $2.5 million of that cost through our tax code - even though most of that $10 million in salary will likely leave the state economy and be spent where the star lives.
Studies by the state's Department of Revenue have detailed the results of providing film tax credits:
- The economic activity generated by film tax credits between 2006 and 2012 led to $55.1 million in tax revenue for the state. But that is substantially less than the $411 million cost of credits the state issued in those years.
- Almost two thirds of the wages paid in connection with the film tax credits went to people who are not Massachusetts residents - including large salaries to movie stars from other states.
- The cost per Massachusetts job created was about $119,000 a year.
To read the report, please click HERE.
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