To the editor:
In the recent article on movie production on the North Shore (“Films like ‘Hubie Halloween’ bring green to the North Shore,” July 29), The Gloucester Daily Times talked to a location manager who cautioned that “The economic impact of a film coming to town shouldn’t be underestimated.” The problem with this statement is that available estimates suggest we are vastly overestimating these economic impacts. The most recent academic research concludes that film incentives, like the state’s film tax credit, have no meaningful economic impact on local employment and wages in the film and related industries beyond the short time that companies are in town.
The idea that the state’s film tax credits pass a simple cost-benefit analysis does not survive scrutiny. According to the same report cited by The Gloucester Times, the state only recouped about 12% of the total cost of the subsidies in new tax revenues in the most recent year it examined. Massachusetts taxpayers ponied up $68.1 million to out-of-state companies to generate 577 largely temporary jobs. This amounts to a hefty $103,756 per job.
The absurdity of this subsidy becomes clear when we consider their opportunity cost — or what we give up in order to keep it around. In 2015, Governor Baker proposed eliminating the film tax credit and using the savings for a substantial expansion of the state earned income tax credit (EITC). Despite an expert consensus that the EITC is one of the best policies for boosting the incomes working-class families and an engine of economic mobility for their children, industry groups successfully lobbied the legislature to kill the proposal. This meant no additional help for working families so the makers of “Ted 2” could collect $14 million in state subsidies.
Anecdotes and brushes with movie stars should not replace serious research and policy analysis when it comes to evaluating film production subsidies. Locally produced films are fun and exciting but the evidence is clear that they are not worth the taxpayer subsidies we currently shower on them.
Assistant Dean of Social Sciences