Mariano scores big victory on film tax credit
Tax break now permanent; no salary cap included
HOUSE SPEAKER Ron Mariano won a major victory in budget negotiations with the Senate as the January 2023 sunset date for the state’s film tax credit was eliminated and all the major financial incentives associated with the credit were retained.
The one concession the House made to the Senate was acceptance of a provision requiring film and TV production crews to spend 75 percent of either their budget or their filming days in Massachusetts, up from 50 percent in the current law. Senate officials said the increase will make sure that more spending supported by the tax credit takes place in the state.
The Massachusetts film tax credit offers producers of films, TV shows, and commercials a tax credit equal to 25 percent of whatever they spend in Massachusetts. The tax credit is one of the most generous in the United States, costing the state between $56 million and $80 million a year. The tax credit has attracted a large number of productions to the state, generated a significant number of jobs, and prompted private investors to build a film studio in Devens.
But the film tax credit has long been panned as an expensive giveaway to Hollywood studios and film stars. The most recent critique came from the Massachusetts Tax Expenditure Review Commission, which concluded earlier this year that the tax credit delivered too little bang for the buck and was “not the best use of the state’s money.”
The House, prodded by Mariano, voted unanimously – 160-0 – in favor of an amendment to its budget eliminating the sunset date of January 1, 2023, and making the tax credit permanent.
The Senate responded in its budget with an outside section extending the sunset date another four years to January 1, 2027, and including several provisions aimed at reducing the cost and retaining more of the spending in Massachusetts.In addition to upping the Massachusetts spending requirement to 75 percent, the Senate capped at $1 million how much of an individual’s salary would qualify for the tax credit, a provision aimed at big name actors and directors from out of state. The Senate proposal also narrowed a provision in the law allowing recipients of the credits to convert them into cash by selling them back to the state at 90 percent of their value or selling them to companies with a large tax liability in Massachusetts at a negotiated price, presumably above 90 percent of the value. The Senate proposal discontinued the ability of film tax credit recipients to sell them to other taxpayers.
None of the Senate provisions, aside from the increase in the Massachusetts spending requirement, made it into the final legislative budget released Thursday night. A vote on the measure is planned for Friday.