Testimony of Mackinac Center for Public Policy — HBs 4907 and 4908, Film Incentive Credit

Summary

Written testimony from Adam Stacey, Director of Legislative Affairs at the Mackinac Center for Public Policy, on HBs 4907 and 4908, which the House Economic Development and Small Business Committee plans to vote on. The testimony states that the bills re-establish a film incentive credit against Michigan's corporate income tax and that the Mackinac Center opposes them and recommends a no vote. It states that Michigan spent $500 million on film subsidies in its previous film program. It states that the bills would be scored at $2.075 billion on the Mackinac Center's Business Subsidy Scorecard, based on the House Fiscal Agency's estimate.

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Full text

On Tuesday, the House Economic Development and Small Business Committee plans to take a
vote on HBs 4907 and 4908, which re-establish a film incentive credit against Michigan’s corporate
income tax. As with previous iterations of film subsidies, the Mackinac Center opposes the bills in
committee and recommends a no vote.

Michigan spent $500 million on film subsidies in its previous film program. Yet the state failed to
develop any film industry that could be sustained without massive taxpayer support.

Even during its most expensive years, the film subsidy barely made a dent in the number of jobs in
the industry. The Bureau of Labor Statistics reports that there were a few hundred more film jobs in
the state over this period. Those jobs disappeared when the subsidies were gone. This is a
minuscule and fleeting part of the state economy.

Supporters have claimed that the new program is better because it allows producers to sell film
credits to other taxpayers. But laundering payments through other businesses at a discount
decreases transparency. Subsidies should be part of the budget and be subject to annual
appropriations. This keeps legislators in control of fiscal policy. The proposed credit is a worse
structure than a grant program.

Because these bills authorize selective business subsidies, they meet the criteria for inclusion on
the Mackinac Center’s Business Subsidy Scorecard. If passed, these bills would be added and
scored at $2.075 billion, based on the House Fiscal Agency’s estimate of the 10-year reduction in
business income tax revenue.


Adam Stacey
Director of Legislative Affairs
Mackinac Center for Public Policy
www.mackinac.org


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