Is the MA Film Tax incentive working?

By Casey Campbell

When you think of filmmaking, the bright white towering letters spelling ‘Hollywood’ typically come to mind. What with Hollywood being the main hub of cinematic storytelling in America, you wouldn’t be faulted for thinking here first. In recent years, filmmakers have been moving away from the hallowed grounds of LA to the East Coast.

In the past ten years, many productions have been taking place in Massachusetts. From The Town (2010) which prominently featured Charlestown, to Spotlight (2015), a film about members of The Boston Globe and their investigative reporting, Boston has been a place that filmmakers are setting their stories, while keeping the locales intact. Other films made recently in the state have decided to camouflage themselves as different environments. Ghostbusters (2016)  is set in New York City, yet some of the shots were created on an empty military compound in Weymouth. Though shooting on a location, and making it look like someplace else is not unprecedented, it begs the question: why did they decide to go to Weymouth, Mass. of all places?

The Massachusetts Tax Incentive is a major driving force, pulling filmmakers into the Bay State. Introduced in 2006, and altered in 2007, the program features three kinds of incentives, according to MAFilm:

  • A 25% payroll credit applied to payroll subject to Massachusetts personal income tax withholding for individual incomes less than $1 million
  • 25% production expense credit applied to qualifying expenses in Massachusetts
  • Sales and use tax exemption

This incentive has worked to bring filmmakers and storytellers to the state. Billy Dowd, a casting director working primarily inside of Massachusetts, said that there are currently three to four films shooting in the Boston area yearly.

Dowd has been active in the industry since the 1980’s and has worked with acclaimed directors Steven Spielberg and Ridley Scott. His love of film and filmmaking has allowed him to work with big name talents for years. As a Massachusetts native, Dowd has the pleasure of working from home, thanks to the tax incentive.

“From what I read, [the tax incentive] definitely brings movies into town,” Dowd said. “There are four movies in Boston now.”

While the incentive has been shown to bring movies into town, he doesn’t consider himself a fan of the legislation overall.

“As far as the tax incentives, to my knowledge, it doesn’t really work, and we are losing money that could go better to other programs,” Dowd said. “It does bring in jobs. And it does make some money for some people.”

Dowd means that the incentive does well to bring people to Massachusetts, but doesn’t succeed in giving many Massachusetts film crew members long term jobs. He said, “a lot of the time the crew will come from out of state because the producer knows people. They say it creates jobs, and it does, but only for a short time.”

Plus, since New England weather can include harsh winters, Dowd said that the only realistic shooting times in the area are between April to October, or November.

 

The Incentive

According to the audit prepared by HR&A Advisors for the Motion Picture Association of America (MPAA), titled “Economic Impacts of the Massachusetts Film Tax Incentive Program,” the tax incentive has done a lot in raising money for the state, as well as creating jobs, if even for a short time. In 2011, the program generated “$183 million in Massachusetts personal income and $375.3 million in spending (i.e. economic output).” It also supported 2,220 full-time equivalent jobs.

Massachusetts Employment in the Motion Picture Production Industry, 2001-2011. Courtesy of MPAA.org
Massachusetts Employment in the Motion Picture Production Industry, 2001-2011. Courtesy of MPAA.org

When shooting on location in Massachusetts, film crews boost the local economy by eating at restaurants, using local housing (hotels and motels) and dry cleaning, and employing peripheral members of the crew. Film crew members from the state could include caterers, drivers, assistants, and even post-production workers.

The state awarded $37.9 million in credits and raised over $375 million in spending. That means that for every $1 given to productions, a bit less than $10 was spent on the state. That is a good growth in revenue, given the state makes $10 for a single dollar given to the productions. But, the money given to productions comes from the taxes of Massachusetts residents.

The audit also mentions how filmmaking helped support the tourism industry, which is worth $16.9 billion. Five films shot in the Boston area have achieved a number of audience impressions that would normally have cost $70 million in advertising. Those films are The Fighter (2010)Grown Ups (2010)Moneyball (2011)Ted (2012), and The Town (2010). The showcasing of Boston locales and identifiable landmarks have, in their own way, incentivized people to visit the city.

Mark Wahlberg and Seth Macfarlane on the Boston set of Ted. Courtesy of Kayana Szymczak For The Boston Globe
Mark Wahlberg and Seth Macfarlane on the Boston set of Ted. Courtesy of Kayana Szymczak For The Boston Globe

The audit, though numerically substantial and informational, fails to mention the films that are shot in MA that don’t directly showcase the state.

A look into the tax credit from The Boston Globe pointed out that nearly twice as many taxpayer dollars are going towards every one dollar that goes to a Massachusetts worker. Tax incentive specializing professor from Northeastern University Peter Enrich said that the tax incentive was “a bad investment of state money.”

That means that the state is giving away money to people who are taking it out of state, than they are giving to people from Massachusetts.

Billy Dowd’s main criticism of the tax incentive was with it’s tendency to give money to out of state crew. According to the Massachusetts Department of Revenue, the majority of the film tax credits ended up leaving the state.

While Massachusetts profits off of the film productions being in the state, it still takes money from tax payers and gives one half to an in-state job.

Outside Parties

Massachusetts is not alone in having a tax break for film crews. New York has an even larger break, with a 30 percent fully refundable tax credit on expenses. The state also allows productions with budgets of more than $500,000 an extra 10 percent break on labor expenses within certain counties. Illinois has a similar system to New York, including post-production procedure.

A reason for the sudden influx in states incentivizing film productions on their locations could be due to many shoots leaving the US and heading for Canada. According to the Financial Post, foreign movie companies spent $300 million in Quebec in 2015, which is 60 percent more than from 2014. In all of British Columbia, the TV and film industry made $2 billion in 2015.

Even Spotlight, the prevalent Boston film which took home the Academy Award for Best Picture in 2016, had some interiors shot in Toronto. The Boston Globe office sets were filmed on a soundstage up north. 

Vancouver and Toronto are popular shooting locations in Canada. As seen in Deadpool (2016) and American Psycho (2000) respectively, Toronto can be made to look like other places.

On location at Deadpool shoot in Vancouver, BC. Courtesy of Dorkly
On location at Deadpool shoot in Vancouver, BC. Courtesy of Dorkly

It seems with the ease in which productions can translate one location into another on screen, and the cheaper dollar Canada has to offer, an American incentive makes sense. What better way to bring creators to the states that with tax breaks. The incentives promote local work, stimulate the local economy, and promote tourism. The incentives also allow out of state crew members to take the state’s money and go. 

Like most legislation, it takes some time to iron out completely. Rather than get rid of the tax incentive completely, like Governor Charlie Baker has mentioned, Massachusetts legislators should weigh the pro’s and the con’s, and make the system better than it is.

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