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Mass. Film Tax Credits: Blessing Or Boondoggle?

Ben Affleck films a scene from "The Company Men" in downtown Boston in 2009. (akrk5785/Flickr)

Ben Affleck films a scene from "The Company Men" in downtown Boston in 2009. (akrk5785/Flickr)

BOSTON — Two of the movies up for Best Picture at this weekend’s Academy Awards were made here in Massachusetts: “The Fighter,” starring Boston native Mark Wahlberg, and “The Social Network,” the story of how Mark Zuckerberg created Facebook when he was a student at Harvard.

In all, films shot in Massachusetts have 16 Oscar nominations this year. But that number might not be so high if it weren’t for state taxpayers. That’s because in 2009 — the year most of those movies were produced — Massachusetts gave out more than $80 million in tax credits to encourage filming here.

But the wisdom of those tax credits is in dispute. So WBUR’s All Things Considered host Sacha Pfeiffer spoke with two people on separate sides of the debate: Peter Enrich, a law professor at Northeastern University who opposes the state’s film tax credit program, and supporter Vinca Jarrett, founder of the Boston firm FilmPro Finance, which helps movie-makers get financial backing.


SACHA PFEIFFER: Vinca, do you have specific examples of how cities or towns have benefited because of a movie that was made in Massachusetts?

VINCA JARRETT: Absolutely. There is a movie called “The Invention of Lying” that was filmed here last year with Ricky Gervais and that put an actual $2 million into the city of Lowell’s income. Essex got $150,000 from the movie “Grown Ups.”

PFEIFFER: Peter, you don’t quite buy that the benefit is that beneficial?

PETER ENRICH: No, and we have to understand a couple things. First, the state is presently spending about $100 million a year on these programs. What are we getting? The Department of Revenue tracks every dollar that is eligible for the tax credit and they just issued a big report, and in the big report they said, ‘Let’s add up all of the jobs that are produced in Massachusetts by the spending that is eligible for the tax credit.’ And of the jobs that are of Massachusetts employees, it was less to 500 jobs. The cost works out to about $170,000 for each of those jobs. The typical job pays about $50,000.

PFEIFFER: Vinca, as you certainly know, the state is facing a serious budget problem: a budget gap of up to $1.5 billion. Do you think that, given the state’s current economic condition, when it’s having to look at cutting local aid and public higher education and mental health hospital beds, it can afford tax credits to the film industry?

JARRETT: I think they can’t afford not to do it. I think if they don’t do it, we will lose an entire industry that’s been creating and building.

PFEIFFER: Do tax credits for the film industry really spur long-term economic development? Because many of these films are only on location for a few months, maybe only a few weeks. So how much of a lasting impact do the credits ultimately have?

JARRETT: An individual film may come in for anywhere from a month to six months, but a production company lasts forever. And what we’ve seen repeatedly in the strong tax credit area is the same production companies keep coming back and making films again and again and again. Disney keeps coming back and bringing us more movies. Local home-grown producers like Dorothy Aufiero, who did “The Fighter” this year, is looking to bring not one, but several more projects here. She’s made many projects here, she lives here, she’s well-connected, and she’s bringing more and more movies.

ENRICH: The problem is that film production is a very mobile business. It takes a few months to make a film. The next film is going to be located where it makes sense to locate that next film. The few early states to adopt the tax credits — Louisiana and New Mexico were the first — they each built infrastructure, sound stages and things like that, thinking that they were going to secure an industry. Those sound stages are now in bankruptcy because other states came in and offered similar credits and the business moved elsewhere. This is not like investing in a biotech facility that, once it’s there, it’s going to be there for 20 years. This is: we’re going to have to continue paying $100 million every year for the indefinite future. And we have to weigh the costs against the benefits.

PFEIFFER: Vinca, the Department of Revenue in the state found that only about a third of new spending fueled by these tax credits went to Massachusetts residents or businesses, and that a lot of the money went to fund the salaries of movies stars who make a million dollars or more. If only a third is staying in the state, is that worth the expense of the program?

JARRETT: Talent, producers, writers, directors — this is what brings the film in in the first place. And to be competitive, we must offer this to them.

PFEIFFER: Peter, as Vinca points out, almost every state in the country now has film tax credits. Does that give Massachusetts no choice but to offer them as well for competitive reasons?

ENRICH: No. I think probably those states that are smart enough — and a couple have suspended their programs — to spend the money on other things and seek out other niches where they can be more productive, are going to end up with stronger economies as a result. We would not have as robust a film industry, but we could spend that $100 million and do a lot of other things that would be much better for our future.

JARRETT: I think there would be states that would definitely debate that. New York has increased its tax credit. On March 2 Puerto Rico will be increasing its tax credit. Louisiana has maintained one of the strongest film tax credit programs. And in spite of the fact that too many studios went in too quickly, there are several studios that are still thriving and have regular production coming through there.

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