Still the Reel Deal

An Editorial By the Boston Herald Editorial Staff:

Thursday, July 9, 2009

Massachusetts is lousy with film crews and big stars this summer but leave it to the usual critics to try and snatch defeat from the jaws of victory.

Yes, critics of the state’s film tax credit program are waving a new Department of Revenue report around to argue that the film tax credits, now in their fourth year, are a net drag on the state’s economy.

The study, they note, concludes that for every dollar the state laid out in tax credits over the first three years, it realized only 16 cents in return. And they whine that the benefits are accruing to Hollywood A-listers and out-of-state crew members at the expense of taxpayers.

But the critics ignore the fact that the film credits were designed as much as a stimulus program for the private sector as they were to boost the state treasury. Production companies have to spend big in order to qualify for any credits - and over the last three years that has translated to a whopping $676 million, DOR estimates.

The naysayers cite the finding that only 18 percent of wages eligible for tax credits were paid to Massachusetts residents (a “mere” $63 million) - the rest to out-of-staters.

But the report also found that more than 40 percent of the nearly 2,000 new jobs directly tied to the industry were held by Massachusetts residents. And as the report itself suggests, more Bay Staters will lay claim to more jobs as the local film industry matures.

Finally, the report doesn’t estimate the impact of two new planned sound stages, which will generate construction and permanent jobs, nor does it consider the impact of film-related tourism or state savings on, say, unemployment or health care thanks to industry employment.

In a dismal economy, tax incentives like these are an easy target, especially for those who hate to see anyone’s tax burden reduced (never mind Leonardo DiCaprio’s) if it means fewer dollars for the government program du jour. And the cost-benefit analysis must tip heavily in the Bay State’s favor to justify the continuation of these credits.

But this program is in its infancy. The outcry is a bit like writing a bad review without bothering to watch the end of the movie.