by Christian Wade
Connecticut lawmakers are considering a plan to scrap a controversial tax credit that has been criticized as a giveaway for big Hollywood movie studios.
A new proposal filed by several lawmakers would phase out the state’s film tax program, which doles out tens of millions of dollars each year in tax credits for movie and TV productions.
Connecticut’s Film and Digital Media Production Tax Credit offers up to 30% off approved production expenses and costs for filming in the state. There’s no cap on the tax credits, which can be sold, transferred to another studio or even cashed in by production studios. To qualify, production costs for a film or commercial must exceed $100,000 within a year.
But the tax credits, which are among the most generous in the nation, have been criticized for costing the state more than $1 billion over the last decade with little return for the money.
Last year, the Lamont administration called on lawmakers to consider capping or reducing Connecticut’s tax incentives for film, television and digital media production.
A 2019 report by the state Department of Economic and Community Development found that over the last decade, the average economic impact of the film tax credit amounted to a loss of $58,510,604 in net revenue annually, or more than $1 billion in total.
“While there are gains in jobs, the additional revenues gained by the state do not compensate for the loss in state tax revenue due to the credits,” the state agency said.
Film producers can also sell the tax credits to other entities as part of financing deals. A recent study found upwards of 60% of the film tax credits issued by Connecticut over the past decade were claimed by insurance companies.
Supporters of the program, which include local producers, crew and actors, tout its economic benefit and argue phasing it out would hurt the state’s small, but thriving movie industry.
They’re prodding state lawmakers to expand the tax program to offer up to 37% reimbursement for production costs, arguing the added costs would be outweighed by the benefits to job creation and the local economy.
Other states such as New York are debating whether to scrap or adopt film tax credits as part of broader discussions on eliminating unproductive tax breaks for corporations.
In some cases, the issue has been framed around “Hollywood hand-outs” with the super-PAC Americans for Prosperity, created by the Koch brothers, funding campaigns to eliminate the credit mostly in states led by Republican governors, including Maryland, North Carolina and Florida.
Still, other states, like New Jersey and Massachusetts, are headed in the opposite direction.
New Jersey expanded its tax credit last year from 30% to 35%, while in Massachusetts lawmakers approved a measure last year, making the state’s 25% film tax credit permanent.
– – –
Christian Wade is a contributor to The Center Square.
Photo “Filming a Movie” by Lê Minh.
