tax credits

Today's and yesterday's Boston Globe highligt an estimated $25 million a year the state gives in questionable tax breaks to businesses aimed at economic development.

The Massachusetts Economic Development Incentive Program is part of $1.7 billion in tax breaks the state gives out every year that are aimed at economic development (for more on these breaks, check out the Mass. Budget & Policy Center report).

While Legislative leadership has been reluctant to raise revenues, it's hard to fathom how our cities and towns will absorb the cuts that will come from an expected 5 percent reduction in Local Aid.

In communities across the state libraries are closing or scaling back their hours, police and fire fighters are facing lay offs, and the essential city services that keep communities functioning are imperiled.

Legislators have been working to make the businesses that receive tax credits from the state more accountable. Last year, the Revenue Committee passed a bill that would have required businesses receiving tax credits to issue annual reports detailing the job creation they commit to when applying for the tax credits.

While the bill did not pass this year, there is growing awareness of the numerous loopholes in the state's tax code. Now more than ever, our elected officials must weigh these tax expenditures against the cuts they're making in our communities.

Deb Fastino from the Coalition for Social Justice and the Coalition Against Poverty held up this sign last April, and we blogged about it here on April 17th 2008!

We couldn't resist reposting the blog since the distiguished findings of Mass Inc and the Mass Budget and Policy Center (linked below) have been confirmed by the Herald's story by Dave Wedge "Chasing a Pipedream," citing an "independent report that criticized government tax credits for the industry and said states such as Massachusetts are wasting precious tax dollars trying to keep up with New York and Los Angeles." 

April 17th, 2008. Everyone likes to see their hometown on the big screen, and many states are competing to entice blockbusters with tax incentives, hoping to attract this relatively low-pollution, high-profile industry. The question is whether Massachusetts taxpayers are getting enough return on these investments. In Commonwealth Magazine, Bruce Mohl explores the potential direct and ripple effects of films on the Massachusetts economy:

The Revenue Department estimates it will collect $18.6 million in employee withholding taxes from the films that have come here so far, well short of the $138 million it will cost in tax credits to lure them here. Film industry officials say far more tax revenue will be generated as the movie spending ripples through the economy, but no one knows how much. The other big unknown is how long our credits will remain attractive; other states keep ratcheting up their credits to steal the business away.

And the Mass Budget and Policy Center's Brief on the Film Industry Tax Credit digs deeper into several aspects of the film credit, including the credit's cost, effects on job creation, and how it lines up against other types of credits:

The 25 percent rate is significantly higher than most credits in the state tax code. For example, Massachusetts has an investment tax credit that provides a credit of 3 percent to certain companies that make investments in qualified tangible property. The state also has an Economic Opportunity Area Credit that provides a credit of 5 percent of the cost of property a business invests in within an economic opportunity area.

With a $1.3 billion state deficit, how can we justify subsidizing an industry that has a negative impact on revenues and a minimal impact on job creation? Shouldn't we be spending that money on public structures that have the potential to truly stimulate our state and our people?

In a Saturday OPED in the Herald, Rep Steve D'Amico points out that our current tax policy that providing tax incentives to the movie industry is costing us a bundle.

Worth every penny some people think!!

The movies have come to Massachusetts in a big way. It seems that every week there is another story in the news about the success of the film production tax credits enacted by the Legislature in 2007. Hundreds of good high-paying jobs! Hollywood East! There is now serious talk about building one or more movie studios here.