State government

New tax credit for live performances surfaces again

Inspector General urged House leader not to move ahead

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HOUSE LEADERS are trying once again to launch a new tax credit to lure live theater, dance, and musical productions to Massachusetts.

The so-called live performance tax credit received little attention on Monday when House Speaker Ron Mariano and his Democratic colleagues rolled out economic development legislation containing a tax relief package of more than $1 billion for Massachusetts.

Sandwiched between the tax cuts, rebates, and financial aid for hospitals, nursing homes, and hotels was the live performance tax credit, a controversial measure that the House had previously approved in 2014 and again in 2016. Former governor Deval Patrick vetoed the measure in 2014.

In dollar terms, the tax credit is fairly small — $5 million annually to offset the in-state payroll, production, and transportation costs of bringing a live stage musical, dance, or theatrical production to Massachusetts for its pre-Broadway or pre-off Broadway tryout or its national tour launch.

The concept behind the live performance credit is very similar to the state’s film tax credit, which provides lucrative incentives for productions to film movies, TV shows, and commercials in Massachusetts. 

The film tax credit passed originally in 2006, but it only became permanent last year after years of debate about its cost and benefits, including a commission analysis that said the credit succeeded in boosting employment but at a steep cost of $100,000 per job.

House leaders who are big fans of the film tax credit are now pursuing the live performance tax credit. Their proposal offers productions tax credits equal to 35 percent of all in-state payroll costs and 25 percent of production, performance, and transportation expenditures as well as out-of-state payroll costs related to the performance.

What makes the tax credit attractive is that it can be sold. Companies that book a theater here generally don’t pay much in taxes to the state. But the proposed new measure would allow them to sell the tax credit at a slight discount to a local business that does. That way both businesses would benefit – the touring company pockets cash and the local business pays less in taxes.

In April, state Inspector General Glenn Cunha sent a letter to the House’s top budget official, Rep. Aaron Michlewitz, urging him not to approve a theater tax credit until it is fully vetted. 

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About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

He said the 35 percent credit on in-state payroll costs would be the highest in the nation and warned that far too many of the expenditures covered by the credit would not benefit the Massachusetts economy.

“There is no evidence that the state’s return on investment will exceed the costs of the program,” Cunha said.

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