Massachusetts: Transparency Report reveals details of $136 million in tax credit programs

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At the end of December 2015, the Bay State’s Department of Revenue (DOR) released its Tax Credit Transparency Report for 2014. By law, any agency that administers refundable and/or transferable tax credit programs must submit to the DOR an annual public report by May 15. The report is to provide information on the credits awarded or issued for the previous calendar year, but does not require data pertaining to the original recipients’ credit transfers.

In 2014, there were six transferable and seven refundable tax credit programs that were subject to the reporting requirements, though not all of them actually issued credits. One, the film tax credit, is both refundable and transferable. For each, the report provides several details, like the project name, identity of the taxpayer receiving the credit, and the amount and date of the credit.

Here is the list of tax credits and the amount of tax credit actually issued:

 Transferable and refundable tax credits issued 

 Film Tax Credit: $57,938,121.00



 Historic Rehabilitation Tax Credit:


 Dairy Farmer Tax Credit:


 Low-Income Housing Tax Credit:
 Certified Housing Development Tax Credit:
 Brownfields Tax Credit:
 Life Sciences Tax Incentive Program –
 Investment Tax Credit: n/a
 Medical Device Tax Credit:
 Life Sciences Tax Incentive Program –
 User Fees Credit: n/a
 Community Investment Tax Credit:
 Life Sciences Tax Incentive Program –
 Research Credit: n/a
 Conservation Land Tax Credit: 
 Life Sciences Tax Incentive Program –
 Jobs Credit: n/a
   Economic Development Incentive Program

 Credit: n/a


The film tax credit program

The film tax credit has been especially controversial in Massachusetts. In general, film production companies may qualify for three benefits: a sales and use tax exemption, a transferable 25 percent payroll credit, and a transferable 25 percent production expense credit. A film production company must spend at least $50,000 during a consecutive 12-month period to take advantage of these tax breaks.

Projects subject to the credits include, feature-length film, video, digital media endeavors, TV series with no more than 27 episodes, and commercials, and must be at least partially made Massachusetts.

When the report came out, the Tax Foundation characterized Massachusetts’ film tax credit as a dubious and wasteful one, citing a 2012 DOR study of its first seven years, from 2006-2012. During that time, productions in the state included the movies Captain Phillips, Moneyball, The Fighter, The Social Network, The Proposal, and Gone Baby Gone, and the television shows This Old House and Boston’s Finest, among many others. The Tax Foundation condemned the fact that in the seven-year time frame, it took $118,873 to create one net new Massachusetts resident job, most of which were very short term, lasting less than three months.

However, the study also revealed that during that same period, the incentive resulted in $260.9 million in new spending in the state’s economy. After taking into account the full impacts, including the direct and multiplier impacts, the program generated net new Massachusetts state Gross Domestic Product of $200.5 million, and $44.2 million in personal income.

When Gov. Charlie Baker introduced his 2016 budget proposal in early 2015, he tried to phase out the film tax credit in favor of increasing the earned income tax credit, from 15 to 30 percent. Lawmakers thwarted this effort, and in July 2015, MassLive quoted the governor as saying that any plans he has to pursue elimination of the tax credit constitute “a decision to be made down the road. The legislature's clearly spoken on this."

Film tax credit programs are also controversial outside of Massachusetts

In 2012, The Pew Charitable Trusts published an article titled Tax Breaks for Sale: Transferable Tax Credits Explained, deciphering the business of film industry credits, and analyzing why states created them in the first place, how much they cost, and how they are transferred.

The article summed up the controversy nicely: “Critics on the left argue that states commit too much money to incentives, money that could go to schools or health care. Critics on the right say that states could eliminate incentives and use the savings to lower tax rates for everyone. Many businesses and policymakers argue, however, that they're an indispensable part of states' economic development strategies and that growing the economy will ultimately help a state's citizens and its bottom line.”

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