On Tuesday, March 31, Kevin P. Martin & Associates (KPM) attended a hearing on Beacon Hill by the Joint Committee on Revenue on Governor Baker’s bill H62 “An Act to support working families.” This bill proposes increasing the Earned Income Tax Credit and eliminating the MA Film Incentive. The Gardiner Auditorium was packed at the outset of the hearing, which was scheduled to run from 10:30 AM to 2:30 PM; however, testimony continued until past 4 PM. Chad Robinson, principal at KPM, testified in support the film incentive.
The first to testify was the governor’s Secretary of Housing and Economic Development Jay Ash, who was one of very few people to testify against the film incentive. The DOR commissioner Amy Pitter and several of her staff proceeded to join Mr. Ash and cite from the DOR report on the film incentive for 2012. This report states that 2012 saw $316 million in qualified spending related to the film credit, with a third of that going to Massachusetts residents and vendors. What’s troubling is that the report also states that approximately 1,351 net new Massachusetts FTEs were created in 2012. The DOR numbers are inaccurate, and it’s too bad, because everyone and their brother is quoting them. A large feature film made in Massachusetts typically directly employs 200 to 600 Massachusetts residents, let alone the jobs supported by expenditures to in-state vendors. In 2012 there were at least 19 films and TV shows made in Massachusetts that each spent over $250,000, according to MAFilm.org, excluding commercials and most independent films. The DOR’s report states that only 650 direct resident FTEs, a component of net new Massachusetts FTEs, were created in Massachusetts during 2012, but the report doesn’t give enough detail to tell exactly how the DOR arrived at this figure.
In support of keeping the film incentive in MA, Robinson testified that many jobs created by the film incentive are not captured in the DOR report, such as accounting jobs at CPA firms that audit the production companies. Fees for these audits are non-qualified costs, despite the fact that the vast majority of individuals working at these firms are Massachusetts residents. Representatives from Zero vfx testified that their business, which grew from three people to fifty-two employees in a few years, would not have been possible without the film incentive, yet because the bulk of the work they do does not qualify for the credit, these jobs are not reflected in the DOR report.
With few exceptions, those testifying at the hearing spoke either in support of the Earned Income Tax Credit or in support of the film incentive, or both. Many speakers pointed out that it doesn’t make sense to pit the EITC against the film incentive, since both are good for Massachusetts. One representative from a non-profit, which uses set and prop donations from film production companies to benefit the poor, commented that the day’s experience was surreal for her. On one hand she was hearing testimony from the people she typically helps (the EITC supporters) while also hearing from the people who help the people she helps (the film incentive supporters).
While the future of Baker’s bill is unknown, the testimony from the hearing shows there are many supporters of the Massachusetts film incentive program in the legislature and the bill has a steep hill to climb for passage.
Kevin P. Martin & Associates, PC
C. Logan Robertson, CPA, MSA