Thursday, October 10, 2024
HomeBreaking NewsBipartisan bill aims for taxpayer-funded film tax credit program

Bipartisan bill aims for taxpayer-funded film tax credit program



(The Center Square) – Tripartisan bills in the Minnesota House and Senate seek to spend up to $25 million of taxpayer money on film tax credits.

SF 1986 is authored by Sen. David J. Tomassoni, I-Chisholm, and Senate Tax Committee Chair Carla Nelson, R-Rochester, with mirror legislation in the DFL-controlled House from Rep. Dave Lislegard, DFL-Aurora.

The bills seek to create a transferable tax credit of up to 25% on qualified in-state expenditures for TV and film production, similar to many programs in other states.

“This bill will bring millions of dollars in new spending and thousands of jobs to Minnesota,” Melodie Bahan, executive director of MN Film & TV, said in a statement to MarketScreener. ‘We’re grateful for the bipartisan support of legislators who understand that film and TV production can be part of our post-COVID economic recovery.’

Nathan M. Jensen, a University of Texas economist and co-author of Incentives to Pander: How Politicians Use Corporate Welfare for Political Gain, told The Center Square that film industry tax incentives are overblown and abused.

“Film incentives have been heavily criticized by academic studies and state evaluations and audits. One recent evaluation is [Pennsylvania’s] evaluation which includes summaries of other evaluations (page 15),” Jensen wrote in an email. “As a rule of thumb, for every $1 in film incentives, states only recoup $0.20 in revenue. They are some of the lowest return economic development incentive programs in the country.”

Jensen said a good feature of the bill was the $25 million annual cap. Many state programs either have a much higher budget or don’t cap spending.

The bill aims to create a transferable tax credit where production companies sell credits to others because most of the production companies only operate short-term in the state, so a tax credit isn’t valuable to them, Jensen said.

“If a company doesn’t have enough operations to use their tax credits, then they probably have a small economic impact on the state,” Jensen wrote. “These programs are essentially giving cash to companies, without politicians openly admitting they are giving cash.”

Jensen said many best practices aren’t included in the bill, which is “largely silent on the transparency of the program.”

The bill appears not to incentivize hiring in-state actors over out-out state actors.

Michigan’s film tax credit bill, for example, would offer a 30% tax credit for employing Michiganders, while hiring nonresidents could garner a credit reduced to 20%.

“Hiring a couple of A-list actors and paying them from the [Minnesota] treasury isn’t in the spirit of these programs,” Jensen said.

The current bill doesn’t enact mandatory audits to ensure production companies are employing local residents. Jensen suggested the state make a website listing film tax credit recipients as well as tracks film tax credit transfers.

Several unions support the measure, including the Minnesota AFL-CIO, the Teamsters, the Stagehands (IATSE) and SAG-AFTRA, which argue the bill could revive an industry on life support.

A 2019 report by the Motion Picture Association of America found the film/TV industry created 2.6 million jobs nationwide, 927,000 of which were direct jobs.

The bill has a 10-year sunset but doesn’t enact any evaluations or audits in that time, which is problematic, Jensen said. He added that those in charge should ensure the program is working and companies involved are following rules.

“What is the point of sunsetting a bill if you aren’t committed to reviewing it before renewal?” Jensen asked.

Jensen also suggested a cap on individual productions so one extremely expensive movie doesn’t consume the annual allocation, as a low cap would ensure small productions benefit from the program.



RELATED ARTICLES

Most Popular

Recent Comments