A news service for the people of Michigan from the Mackinac Center for Public Policy

The state’s film incentive, along with most of the state’s selective favors for industries and businesses, was eliminated with the passage of Gov. Snyder’s tax reform in favor of a smaller, direct expenditure. In light of this victory, it is disappointing that legislators rushed to begin a new round of economic development gimmickry.

Rep. Mark Ouimet, R-Scio Township, recently announced that he would introduce legislation to allow for film credit zones, which would enable municipalities to offer the film credits that were eliminated under the tax reform. In addition, a stealth campaign to increase the state’s direct expenditure is happening.

Michigan’s film subsidy program was enacted in 2008 and offers refundable film tax credits worth as much as 42 percent of a production’s in-state expenditures. In just three short years the program racked up $361 million in credit obligations. On an annual basis, that’s roughly twice as much as the state spends on Central Michigan University.

Nor was this program designed to boost jobs overall in Michigan. While proponents thought that the productions brought into Michigan would stimulate employment, there is an unaccounted cost to the economy for providing these jobs. The hundreds of millions of dollars in refundable tax credits came from the Michigan treasury and the Michigan taxpayers, all of whom have some better ideas for how the money might be used. The economic consequences to these individuals are unknown, unpredictable and potentially significant.

Even if the program was successful in turning Michigan into the next Hollywood, it would simply have transferred jobs from one economically depressed place (California) to another (Michigan). And the costs to transplant all those jobs would bankrupt the state.

The program was replaced with a much smaller $25 million direct expenditure in Gov. Snyder’s recently passed tax and budget presentation.

The new tax plan doesn’t really go into effect until January, so the new attempts would resurrect the program before it’s even buried.

Michigan legislators should think differently. The three years of the film incentive brought plenty of glitz to the state, but nothing worth the $361 million expense. The state was right to scale back the program, and legislators should be considering how to eliminate it completely instead of trying to bring it back.

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See also:

Do 'Stealthy' Michigan Senators Want to Spend $100 Million on Film Subsidies?

MichCapCon Coverage of the Michigan Film Subsidy Program

Meet James Hohman, Assistant Director of Fiscal Policy at the Mackinac Center. James discusses his latest project, an analysis of Proposal 1, the proposal on personal property tax reform that will appear on the August 5th ballot. Read more about Proposal 1 here: http://www.mackinac.org/20246


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