Movie magic

Michigan’s film incentives were instated in 2008, and by 2009, 76 total projects had been completed for $305,983,113 in total spending, according to the Michigan Film Office. Currently, the incentive includes a refundable tax of up to 42 percent of a production company’s expenses. There are specific rules and regulations for which productions qualify, who is considered a resident of Michigan and what is considered a direct production expenditure.

The bottom line is this incentive is making Michigan money, yet governor-elect Rick Snyder said it is time to gradually phase out the tax credits.

Michigan productions employed about 2,800 people in 2008 with a total expenditure of $125 million. This grew to 3,867 jobs in 2009 with films spending more than $180 million, according to the Film Office. A 2008 economic impact report by Michigan State University predicted these numbers to keep increasing through 2012.

The fact that Snyder wants to eventually eliminate these incentives would lead to a huge loss of revenue and jobs in Michigan, something the state cannot afford right now.

One of the concerns about the tax incentive is the large sum that the state is required to refund to these productions. From productions in 2009, the state had to pay back an estimated $68.7 million, according to the 2009 Michigan Film Office expense report. This is a large bill for a state desperately trying to reduce its budget deficit.

However, the benefits outweigh the costs of the high tax breaks. Eliminating the film incentives would avoid the expensive reimbursements Michigan makes to production companies, but the state would also lose thousands of potential extra jobs and millions of dollars of revenue outside of direct production costs. The money that Hollywood stars spend on entertainment when they’re in Michigan does not fall under the tax break. The money tourists spend when drawn to the area to see or be an extra in the film is also direct revenue for Michigan.

The opportunity to showcase Michigan in multiple films, increase tourism and bring well-known actors and producers to the state for extended periods of time are all positive results for Michigan, beyond the ever-important monetary gain and rise in employment. Eliminating these film incentives would cause the productions to simply find less-expensive areas to film.

Though the tax rebates may be expensive, Michigan cannot afford to lose the other benefits that come with them.