(According to a state press release) it looks like the chairs of the legislature’s two budget committees are taking a hard look at the benefit of the state’s film tax credit enacted in 2006 and backed by former Speaker of the House James Amann.The film tax credit is a discounted tax rate for TV and film production that takes place within the state. The press release (linked here), which is admittedly incomplete, says productions spent over $600 million in the state and created an estimated 2,040 freelance jobs. The release also details an estimated $1.4 million in payroll taxes against roughly $90 million in tax credits.
“The goal is to objectively determine if the state comes out ahead when the giveaways are matched up against the new business they generate,” Sen. Eileen Daily, D-Westbrook, said in the press release.
The important thing to consider is that the payroll tax isn't the only way the state benefits from the increased TV/film productions. There's also the purchases of materials, hotel rooms, food & beverage, etc. that generates taxes that otherwise wouldn't be made. Hiring local workers not only provides payroll taxes, but it cuts down on the need for unemployment benefits, adds state income tax, and increases skills of the work force. Production companies are looking to move permanently to Connecticut which will provide more jobs and add to the tax revenues, albeit at a reduced tax rate.
But considering these economic boosts wouldn't occur if the tax credit wasn't in place, you have to ask if getting 70% of the tax rate for real addition productions isn't better than 100% of the tax rate for no additional production.
Last year CT Voices for Children (a very worthwhile organization) made some news by publicly criticizing the value of film tax credits enacted by the legislature in 2006. The executive director complained that the danger is the film tax credit is uncapped and “as a result, there is no limit to the revenue loss Connecticut might face through these two credits.”
The irony here is that by focusing on the 30% lost revenue for the credit, she's ignoring the additional 70% tax revenue generated by productions that otherwise wouldn't move here. Sure, there are some permanent production companies here that are benefiting greatly from the tax credits, such as WWE, which has their headquarters in Stamford. But before making any changes to the program we need to take a close and detailed look at ALL the data, not just cherry-picked data that doesn't show the whole economic picture.
If the press release is widely distributed without a fair report following it, many people will focus on the figures of $1.4 million gained against $90 million supposedly lost. These numbers are very far from the real economic situation, and if they are used to repeal this program without a fair examination, Connecticut may lose more real income than it saves.
One thing that the tax credit doesn't guarantee is the quality of the films made in Connecticut, as the image above from the filming of "Righteous Kill" demonstrates; a very average cop drama that wastes the talents of two Oscar winners that had scenes filmed here in Milford.