Analysis questions state's film tax credit program

The Federal Reserve Bank of Boston's New England Public Policy Center released a new analysis of Connecticut's film tax credit program that's costing the state almost $90 million per year. The research suggests that the state's tax incentives may do more harm than good.

Here are some of the key points pulled from the analysis:

• The credit does not pay for itself.
• The economic benefits generated by the credit are likely to be short-lived.
• The film tax credit may be less cost-effective than certain other business tax incentives offered by the state such as the research and experimental expenditures credit.
• There is a race to the bottom among states competing to offer the greatest film industry incentives. It may be difficult to establish a sustainable film industry.
  

The report also does a comparison of film tax incentives for selected states, including Massachusetts. Here's the lowdown on the Bay State:

• Rate: 25% (payroll) and 25% (production expenses).
• Requirements: More than $50,000 in Massachusetts production expenses in a 12-month period for payroll credit with more than 50% of expenses or 50% of principal photography days must take place in Massachusetts for production expense credit.
• Exclusions: Salaries for individuals earning more than $1 million are ineligible for payroll credit, but are eligible for production expense credit.
  

According to the Department of Revenue, the film business brought in more than $350 million to Massachusetts last year. The question: Are we paying more than what we're bringing in? Would a similar analysis of the Bay State's tax incentives prove that our tax credit is economically viable?

Click here for the report.

Photo by Sam Baltrusis