Governor Andrew Cuomo convened a tax commission to look at the state’s tax policies and make recommendations. Capital New York obtained a 137-page addendum to the commission’s report that blasts the film tax credit program. It was never published. But thanks to Capital New York’s Jimmy Vielkind, we can read it. Here are some notable excerpts:
Under current law, film production and post-production credits are the state’s second most expensive credit and will cost approximately $420 million per year on average through 2019, after which they are scheduled to sunset. These credits are large compared to industry activity. Because they are refundable, they are akin to cash grants for film-making activities. This section recounts the history of New York’s film credit program and considers claims that the film credit “pays for itself.”
To understand the significance of a credit equal to 30 percent of a film production’s operating costs, consider the impact a similar credit would have for other industries. Based on Internal Revenue Service data and analysis from the Department of Taxation and Finance, if a credit of the magnitude of the film credits were provided to taxpayers in other industries, it would eliminate tax liability for companies in most industries many times over.
…it is a misnomer to call film credits refundable: payment will be made to the qualifying business even if it never paid any taxes and never will. The credit is essentially a spending program subsidizing the costs of producing films in New York. Payments to 31 firms in the film production industry were so large that they exceeded the entire tax liability of all 1,600+ firms in the industry in nine out of 10 previous years. Thus, it is unlikely that the payments were truly refunding past payments of tax.
…growth in the industry comes at the expense of higher taxes for other taxpayers or lower spending on state services and investments, possibly reducing activity in other sectors of the economy. There are also other problems with the credits. For example, many of the jobs involved in film production are temporary and the state can only maintain those jobs and the level of activity in the industry if it continues to offer the credits. Retaining the jobs could become more of a challenge if other states were to increase their credits and other incentives.
This sums up why I was so critical of the Amazing Spider-Man 2 shoot in Rochester. People were inconvenienced for days. Businesses lost money and fell for false promises of reimbursement. The city didn’t charge any extra fees beyond cost to use public right of ways. The best part? Taxpayers paid for 30 percent of the spectacle.
Links of the Day:
– It’s pretty clear Rochester superintendent Bolgen Vargas floated a trial balloon when he suggested colleges run some city schools. Local colleges didn’t know much about the idea and none of them immediately signaled interest.
– University of Rochester students think College Town is too far. Really?
– NBC News called out weird “exit portals” at the Syracuse airport. “You’re not allowed to just leave the airport.”
– 39 people have fallen at professional stadiums over the last decade. Fourteen have died.
– Parents in a Buffalo suburb are mad an avatar used in a virtual learning tool can be made to look naked.
– Spencerport students tried out wheelchairs to bond with their classmate who can’t walk.
— Rachel Barnhart (@rachbarnhart) November 20, 2013