The Snyder Budget IV: Tax credits

Lessenbury discusses the reaction to another one of the Snyder budget’s unpopular cuts — the elimination of the film tax credits:

The howling began immediately, some of it less dignified than the rest. Starting at the bottom, Mitch Albom, who wants more of his cloying books made into movies, emitted a protracted whine about the film credits in the Sunday Gannett paper. “As a person who helped create the film credits program, I asked for months to meet with Snyder,” he huffed.

The governor, evidently not knowing that Mitch was a Very Important Person, kept him waiting until two weeks ago, the churl. When the governor didn’t do what Mitch wanted, Albom wrote that he felt like he’d “been punched in the stomach.” No five friends in heaven waiting for Rick Snyder, no siree!

As Nolan Finley asked last week:

How can he justify spending $160 million on a Hollywood giveaway while asking senior citizens, middle class families and public workers to sacrifice?

Moreover, he argued,

If we really believed that the subsidies would serve to build a movie-making infrastructure that would ultimately be self-sustaining, that would cast them in a different light. But the experience of other states suggests that when the subsidies are reduced or ended, the film makers jump to another state.

Perhaps realizing that the administration is still at risk of losing the messaging battle, the Governor’s budget director John Nixon reiterated the case against the cuts in an editorial in today’s Free Press:

Our current mechanism is nothing more than a subsidy by which the state writes a check for 42% of the cost of the film project with almost no return on investment to the state coffers.

Furthermore, there are no limits to the number of films or the number of checks we write. If a producer spends $100 million on a film in Michigan, we would be forced to write them a check for $42 million. Michigan simply can’t afford this…

(W)hat state services are taxpayers willing to cut in order to fund the movie business?

…(W)hile economic activity is generated, the film industry doesn’t give the state coffers a return on investment, the industry does not create sustainable jobs for the long term, and the cost for the long-term jobs that it does create is quite high.

In case you still think we need to preserve these subsidies, the Governor brings up another point in his his interview with the Detroit News.  It’s one which, based on their reactions to ‘Detroit 187′, might register with Detroit City Council:

(N)ot all of the productions made in Michigan necessarily cast the Great Lakes State in the best light.

Snyder pointed to Clint Eastwood’s “Gran Torino” as an example: “Watching someone being shot down in a front yard is not necessarily the image I would like for our state.”

While the film lobby has received the most attention, there’s been plenty of pushback regarding the proposal to cut the rest of the state’s business tax incentives as well.  Writing for AnnArbor.com, Rick Haglund cites, as evidence in favour of keeping tax incentives, former Governor Engler’s reversal of his earlier position on tax credits, due to loss of the GM Willow Run plant in 1992. A shrewd commenter points out that, if anything, this example undermines his argument:

All one needs to do is look at GM, Ford, and Chrysler to see if tax incentives work.  All three receive huge incentives and tax abatements from the State of Michigan. None of these companies are adding jobs and any rate that is significant even after chalking up huge profits.

Ultimately, I think advocates for the film subsidies and other business tax credits are going to lose the fight, simply because there are competing with so many other constituencies that are either more influential (the business lobby that wants its overall tax rate lowered, the army of politically powerful retirees who will fight to the very death to keep from having to pay their share of income tax) or can demonstrate more compelling need (the advocates for the working poor trying to preserve the EITC; the education advocates trying to maintain school funding; the municipalities that will be driven into financial distress if statutory revenue sharing is cut).

And that is how it should be.  As Finley argues: ‘Buying jobs is not a healthy economic model.’

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One response to “The Snyder Budget IV: Tax credits

  1. Pingback: 4 reasons to vote Bob Ficano out of office | Motown To Tree Town

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