Why Massachusetts Should End the Film Tax Credit

There’s a state commission that’s currently examining all the so-called “tax expenditures” that the state offers.

The commission has said it wants to review the collection of tax expenditures and eliminate the ones that don’t make sense. It’s also held out the possibility of a eliminating a number of targeted credits in exchange for a zero-sum cut to the overall tax rate (an outcome to be hoped for).

May I nominate one expenditure to make? The Film Tax Credit.

These credits have been controversial from the get-go. Proponents point to growth in employment due to the credits.

Opponents counter that any industry receiving millions in tax credits would likely see some improvement. Its also a relatively small number of jobs (approximately 5,000 to 7,000, depending on the point in time). In addition, much film industry employment is short-term duration — for the length of a filming, then it’s over.

That’s not to say that these jobs aren’t important. But the broader question is whether targeted state incentives (a significant portion of which ends up in the pockets of wealthy film stars, who likely don’t spend much of that in-state) should be promoting these types of jobs.

Much as I enjoy the glamour of the stars coming to town, this is a classic case of inefficient and ineffective tax policy. Let’s hope the commission is paying attention.

Crossposted at Pioneer Institute’s blog.