Blinded by bright lights and stardust: bad tax policy

The Massachusetts film credit is bad tax policy, as we have noted before. But trying to tell everyone that the emperor has no clothes is not politically suitable (excuse the pun). The film credit is House Speaker Sal DiMasi’s way of picking industrial winners; apparently he doesn’t like casinos but loves the glamour trade. The loyal opposition ought to argue for sound tax policy that lowers business taxes for all firms. The data on how much this credit is costing taxpayers is out there. More than any other issue, the economic consequences of the film credit cries out for a public information campaign on corporate taxation in Massachusetts.

Here’s Steve Bailey making my point succinctly in today’s Globe.


At a time when we are fighting about closing corporate tax loopholes, Massachusetts has opened up a gusher for the movie industry. It would be worth determining what we are getting for our money before we widen the gusher still further as is about to happen, no questions asked.

The Legislature is considering a bill that would provide a 20 percent tax credit for construction of the kind of film studios now being discussed for Plymouth and Weymouth. That bill would follow legislation that went into effect in 2006 and was expanded last year that provides a 25 percent tax credit on production costs and exempts the industry from the state sales tax.

Movie investors are not stupid: Leave a bucket of money on a street corner and they will come get it. In 2005 a single movie, “The Departed,” filmed briefly here; Nick Paleologos, the director of the Massachusetts Film Office, expects as many as a dozen movies to be made here this year, bringing in jobs and investment. But state taxpayers will be getting a bill.

Film tax credits, the Boston Federal Reserve said in a highly skeptical report two years ago, “cost states considerable foregone tax revenue. The film production stimulates little additional economic activity in other industries. Consequently, film tax credits do not ‘pay for themselves’ by indirectly generating additional corporate income, sales and property tax revenues.”

About Karl Marx

Left wing libertarian conservative.