Testimony continues organization’s scrutiny of tax incentive programs
MassINC Research Director Benjamin Forman testified today on House Bill H3854, “An Act to Protect Massachusetts Taxpayers and Essential State Services,” calling the state’s film industry tax credit program “well intentioned, but unjustified given the relatively few jobs generated by hundreds of millions of dollars in taxpayer investment.” In questioning the tax credit’s efficacy as economic stimulus, Forman pointed to the lack of transparency in tax incentive strategies, which prevents taxpayers from understanding what they actually get in return for enormous sums of money given to the film industry through public subsidy.
“It’s increasingly clear that the film tax credit can’t create nearly enough jobs for Massachusetts residents to justify the large sums we devote to it,” said Forman, MassINC’s Director of Research and author of several reports analyzing the state’s economic development strategies.
Forman notes that successful lobbying efforts against reporting requirements make it difficult to assess just how many jobs are generated by the film tax credit program. However, using estimates from other studies and comparing the film tax credit to a standard economic development formula that weighs costs over an extended period, Forman suggests that Massachusetts is likely paying somewhere in the range of a million dollars per job.
“This is a shocking sum when you consider the subsidy limit for federal economic development dollars is just $50,000 per job,” he said.
The issue of job creation is critical given the states limited resources and the need to find jobs for more than 300,000 unemployed residents. As Forman asserts, other programs provide more return on taxpayer investment than film tax credit dollars, which “go out-of-state the minute they’re wired to an actor’s bank account.” In his testimony, Forman called for more thoughtful economic development planning and offered as an example the state’s historic tax credit which, given its role in refurbishing older neighborhoods, targets workers and communities most affected by the economic downturn.
MassINC’s testimony continues the organization’s visible track record on the analysis of tax incentive programs in general and the Massachusetts film tax credit, in particular. CommonWealth magazine did a special investigation on the film industry tax credit in its Spring 2008 edition called “Subsidizing the Stars,” and has reported on the issue extensively ever since. The organization’s research effort includes continued analysis of the value of economic development programs, particularly in Gateway cities, where considerable investment is merited to replace job lost in declining industries.