Film tax credit spending flows mostly out of state
Only a third goes to Mass. residents
A new state report says the Massachusetts film tax credit program generated more than $300 million in new spending in 2012, but, as in past years, most of that money flowed out of state.
The state Revenue Department said Massachusetts handed out nearly $79 million in film tax credits in 2012, generating $304 million in new spending. Of the $304 million, a third, or nearly $101 million, went to Massachusetts residents and businesses. The other two-thirds went to people or firms located outside the state, with $83 million going to nonresident actors and directors earning paychecks greater than $1 million.
Some of the films shot in Massachusetts in 2012 included The Heat, starring Sandra Bullock and Mellissa McCarthy; Grown Ups 2, and R.I.P.D.
The report estimates the state gave up nearly $94,000 in taxes for every Massachusetts job created. The cost was $50,647 for every non-Massachusetts job created. According to the report, those costs are lower than in past years. From 2006 through 2012, the state gave up on average nearly $119,000 in tax revenue for every Massachusetts job created and $64,000 in tax revenue for every non-Massachusetts job created.
The state’s film tax credit offers companies that shoot films or commercials in Massachusetts tax credits equal to roughly a quarter of whatever they spend with no cap. The film companies themselves typically sell the tax credits at a discount to companies or individuals who use them to reduce their tax liability. For example, the report said insurance companies between 2006 and 2012 bought $200 million worth of tax credits for nearly $188 million, saving roughly $12 million.A film studio is now up and running in Devens, which should increase production activity in the state. But the Revenue Department said the impact of the studio will not be known until its 2013 report is released. The agency gave no explanation in its report for the long lag time in reporting on the film tax credit.
The agency also said no actors or directors in 2012 paid taxes on residuals, which is income they receive after the release of a film. The Revenue Department said the lack of tax payments on residuals is the subject of ongoing analysis, but the agency says that every year.