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1) Film subsidies pay off for some like robbery pays off for robber  by Anonymous Citizen on October 16, 2008 
The “Scene” and the Unseen

Tom Long of The Detroit News is a terrific movie reviewer - my favorite - but his Oct. 9 column lends too much credence to those who contend that the state's film incentive boondoggle is a worthwhile expenditure of taxpayer dollars.

Long's piece is titled "Michigan's movie role pays off." If the words "for some" were added to the end it might be true, in the same sense that bank robbery pays off - for the robber. The analogy doesn't quite hold, though, because in this instance those absconding with the loot were invited into the vault by the bank's employees.

State officials, desperate to look like they're "doing something" about Michigan's economic slide, are throwing every kind of discriminatory tax credit, abatement and subsidy they can at selected businesses and industries. The latest is what amounts to outright cash subsidies to filmmakers in the form of refundable tax credits; if the credit exceeds the producer's tax liability, the state sends him a check for the difference. Some $148 million in credits have already been approved, and currently there's no limit on how high that could go.

Here's part of what Long wrote about the program: "Dan Gearig, owner of Ciao Catering, which has worked on a number of films, is also a big supporter. ‘And I'm not the only one making money,' said Gearig. ‘My produce guy, my meat guy, the linen people are having a field day. There's definitely a trickle effect going on.'"

To be fair, Long also quoted economist Gary Wolfram - an adjunct scholar with the Mackinac Center - giving an opposing view, but overall the column still fell short of recognizing a classic economic development blunder: Acting on the basis of what's "seen" in a program while ignoring the unseen, and so getting a skewed picture of its real effect. In this instance what's seen is the loot spread around by those film producers. Naturally, the beneficiaries think the Hollywood handouts are a fine thing. What's unseen is the effect on the people from whom the loot was taken. In the bank robbery analogy it's the depositors. In this case it's Michigan taxpayers.

Government has nothing to give to one person that it doesn't first take from someone else. Any benefits enjoyed by the caterer Long cites are at least offset by revenue lifted from other Michigan taxpayers - including businesses - to pay for the film subsidies. Worse, the Michigan Film Office bureaucrats don't work for free, and neither do the legislators who debated the film legislation and voted for or against its passage. Calculate in the share they "take off the top" and an honest accounting of the program is likely to show just one result: A net loss for the state.

Also of note is a sidebar in The News describing how the program works: "Filmmakers submit an initial script, the Michigan Film Office judges whether it is appropriate for the state." Is this what art subsidy supporters really want? Requiring artists to prostrate themselves before government apparatchiks who will judge the "appropriateness" of their work? History suggests that politics, bureaucracy and art make poor bedfellows - great works of art aren't born of backroom deals.

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Michael D. LaFaive is director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a research and education institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.

http://www.mackinac.org/article.aspx?ID=9873

2) Mackinac Center: Film subsidies not the solution  by Anonymous Citizen on March 31, 2008 
Lansing State Journal
"Giveaways to film industry won't pave streets in gold"
Jack McHugh and James Hohman

March 30, 2008

Michigan legislators are rushing to grant extensive refundable tax breaks, government loans and even outright cash handouts to the film industry. Upping the ante from the usual discriminatory tax breaks betrays a tinge of desperation among business subsidy advocates.

The film package is being sold as an economic development initiative, but it's unlikely to have any significant effect on this state's failing economy. That's because Michigan's current gross domestic product is nine times the size of the entire U.S. film and sound recording industry, according to the federal Bureau of Economic Analysis.

A comparison with the auto industry puts this in perspective. In terms of personal income by industry, the entire U.S. "motor vehicle body, trailer and parts" industry accounted for $86.2 billion in 2006. Michigan got $22.1 billion of that, while California's share was $2.6 billion.

The entire U.S. "motion picture and sound recording" industry was a bit more than one-fourth that size: $25.7 billion. Michigan's share was a measly $186 million, while not surprisingly, California got $15.3 billion.

For context, the total personal income for Michigan residents was $341 billion in 2006.

One could look at this state's tiny share of the film industry and rightly conclude there's room to grow. But not even the legislators who voted for the handouts or the governor who called for them can believe Michigan will ever get more than a tiny slice of that industry.

And even if the Great Lakes State somehow managed to garner 5 percent of the nation's entire film production (half-again more than our "fair share" on a per capita basis), our state GDP would increase by a barely noticeable 0.6 percent.

Looking at just the feature-film portion of the industry (the bill seeks to attract TV shows, music videos, sound recordings and more in addition), the Motion Picture Association of America reports 603 movies were released in 2007. To capture 5 percent of that, Michigan would have to attract the equivalent of 30 average-sized productions.

Our chances of meeting that milestone are slim, given that scores of states are also looking to "pick each other's pockets" by using similar tax breaks and handouts to pursue the same Hollywood dreams. Reportedly, the just-passed package puts Michigan in line with the richest of these, offered by New Mexico and Louisiana.

It's not as if Michigan is bidding for a role in a fast-growing industry, either. Film industry growth has been so dismal since 2002 that Michigan's faltering GDP growth rate has actually kept pace with it.

Like all such targeted subsidy and tax-break programs, the main purpose of the film handouts will be to give the appearance of "doing something" while legislators avoid the heavy lifting of passing the broad-based tax, regulatory and labor law reform that would genuinely fix our broken economy.

If they were less star-struck, legislators would finally begin the transformational restructuring and downsizing of government needed to make possible lower taxes for all job providers - not just those who hire movie stars.

3) 2008 House Bill 5841 (Facilitate and authorize tax breaks for Michigan film production )  by admin on January 1, 2001 
Introduced in the House on February 28, 2008, to authorize a Michigan Business Tax credit of up to 42 percent of a film studio’s expenses for shooting a film or TV show in Michigan. The credits would be refundable, so if their value exceeded a studio's tax liability the state would send them a check

The vote was 108 in favor, 0 opposed and 2 not voting

(House Roll Call 146 at House Journal 25)

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