Democrat Contradictions: Corporate Tax Breaks Bad, But Incentives for Hollywood Good
Dems criticize MEDC, but want to give more money to millionaire movie moguls
Longtime Hollywood movie producer Harvey Weinstein would fit most people's definition of a "fat-cat CEO."
Weinstein, along with his brother, Bob, founded Miramax Films in 1979 and then sold it to Disney for $80 million. In 2005, Forbes reported that Harvey Weinstein enlisted the help of Wall Street investment banking firm Goldman Sachs to raise $1 billion to open another studio they called the Weinstein Co.
The Weinstein's net worth has been estimated at $150 million.
Yet, Weinstein Co. received $1.8 million from Michigan taxpayers in 2011 as part of a reimbursement for payment to a Michigan company for post-production work it did on the movie Spy Kids 4. The website, boxofficemojo.com, notes Spy Kids 4 had a $27 million production budget and has grossed about $86 million worldwide.
Michigan House Democrats have repeatedly said they would like to stop "massive tax giveaways," and routinely complain about cozy relationships big business allegedly has with Republicans.
However, House Democrats have universally supported the state's film subsidy program and want to see it continued. Massive tax giveaways to Hollywood apparently are different. For example, Disney received $40 million from the state's film incentive program in 2010 for its expenses in making, "Oz: The Great and Powerful." That year, Walt Disney Chief Executive Roger Iger had a reported compensation of $39.8 million.
When the Michigan House Republicans went to eliminate the film subsidy entirely from its fiscal year 2014 budget, House Democrats proposed maintaining the film budget at $50 million.
"Republicans have repeatedly shown that they put their corporate donors before Michigan residents," House Democratic Leader Tim Greimel, D-Auburn Hills, was quoted in MLive as saying as budget talks began. "They handed massive tax giveaways to big corporations and fat-cat CEOs, and paid for them by slashing education funding and raising taxes on middle-class families."
But House Democratic Spokeswoman Katie Carey said they weren't talking about film subsidies when Rep. Greimel targeted "fat-cat CEOs."
Carey, who is press secretary for Rep. Greimel, defended the film office, saying it was the Michigan Economic Development Corp. Greimel was referring to when mentioning the tax giveaways.
"The MEDC is a slush fund the governor uses to funnel tax dollars to big corporations and CEOs," Carey said in an email. "That money comes from the state without any requirement that new jobs are created. The House Democratic Caucus believes we need transparency and accountability in government, and we need economic development programs that actually work, not empty promises. The MEDC for far too long has wasted tax dollars on proposals that don't work and it must stop."
Michigan Film Office Spokeswoman Michelle Begnoche confirmed that her office is part of the MEDC.
"Politicians of both parties score points with voters by criticizing corporate handouts and special treatment, yet in Lansing they defend even the most egregious example," said James Hohman, a fiscal policy analyst with the Mackinac Center for Public Policy.
Hohman said the film incentive was the single largest taxpayer-funded handout Michigan offers.
Most tax deals require some capital investment, such as improving land or buildings, and the tax incentives are just a fraction of those investments, Hohman said. However, the film subsidies simply require operational spending and the incentives represent a large share of that spending.
The film incentive gives up to 32 percent back to production companies on expenses.
(Editor's note: This story has been edited since its original posting. House Democrats want the film incentives to stay at $50 million, but Democrats universally supported the program under former Gov. Jennifer Granholm, which had no cap.)
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.