Support growing for permanent film tax credit

Christian M. Wade, The Eagle-Tribune, North Andover, Mass.
·3 min read

Apr. 30—BOSTON — One of the most generous tax credits given by any state to the film industry is so politically popular on Beacon Hill that support is now growing to make it permanent.

A bipartisan proposal tacked onto the $47 billion state budget, which was unanimously approved by the House of Representatives this week, would eliminate a Jan. 1, 2023, expiration date on the subsidy. The program, which is more than a decade old, is designed to lure producers of movies, TV shows, documentaries and commercials to film in Massachusetts.

The tax credit would essentially become permanent if the measure is approved by the Senate and survives Gov. Charlie Baker's veto pen.

Supporters of the program tout its economic benefit and argue that letting it expire in two years will hurt the state's small but thriving movie industry.

Rep. Ann-Margaret Ferrante, D-Gloucester, said allowing that to happen could jeopardize jobs and economic growth.

"We're building an industry," she said. "We need to keep the momentum going and keep attracting films to the state."

Film productions hire local set workers, boat captains, carpenters, electricians and others, Ferrante said. Cast and crew spend money in hotels, restaurants and at local businesses.

Despite criticism that the subsidies are a giveaway to Hollywood studio bosses, supporters say the program is a good investment.

"The film tax credits have helped create a motion picture industry, but they've also created thousands of jobs and helped support local businesses," said Steve Crawford, a spokesman for the Massachusetts Production Coalition, which represents the industry. "If those credits are allowed to sunset, the movie studios will go somewhere else and those jobs will go away."

The program offers a subsidy equal to 25% of production costs including set construction, wages, security, food and other expenses. There's no cap on the tax credits, which can be sold, transferred to another studio or even cashed in by production studios. The credits may be used up to five years after being awarded.

To qualify, production costs for a film or commercial must exceed $50,000 within a year. Studios can also get an exemption from the state's 6.25% sales tax.

Since 2006, the state has doled out more than $550 million in film tax credits for major Hollywood hits like "The Town" and "Godzilla: King of the Monsters."

In 2019, the state awarded more than $77 million in credits to 179 productions, according to the latest data from the state Department of Revenue.

Proposals to repeal the program, including one filed several years ago by Baker, have met resistance from lawmakers and municipal leaders.

Earlier this year, a state panel flagged the tax credit as one of several that the Legislature should consider modifying or repealing altogether.

The Tax Expenditure Review Commission, which included state officials, lawmakers and fiscal experts, noted the economic benefits of job creation and spending in the state, but it questioned whether those are justified by the estimated cost to the state of the subsidy — about $100,000 per job created.

The credit is one of the most generous in the country.

"The use of this credit by less than half a dozen large companies is a strong indication that it is not relevant," the panel wrote. "While its low cost suggests it might be easily justified, we conclude the average tax credit is too small to provide a meaningful incentive to the relatively large businesses that claim it."

Supporters of the program say those cost-per-job estimates don't factor other fiscal impacts, such as local economic activity spurred on by film production.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group's newspapers and websites. Email him at cwade@cnhinews.com