Author: Arpan Lobo, Detroit Free Press
Stakeholders and lawmakers backing bills to revive a state-backed incentives program to attract media projects say Michigan has been a virtual nonfactor in the film and commercial industry since the previous iteration of the program was gutted in 2015.
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Furthermore, supporters of bills introduced in July to create an incentive program for film and video production in Michigan say bringing media projects back to Michigan can help spur job creation in the state. The proposal is not without critics, however, as some in Michigan view the plan as a poor use of the state’s potential tax revenue.
Lawmakers have dubbed the matching legislation in the state House and Senate to create a revamped film incentives program in Michigan the Multimedia Jobs Act. The word “Multimedia” is a key distinction, backers say, as the proposed incentive program would apply to such efforts as commercial filming and professional training videos, in addition to traditional film and television projects.
As introduced, the bills:
- Create a transferable tax credit for media projects filmed in Michigan, starting at 25% of total spending and rising to 30% based on the inclusion of “filmed in Michigan,” “Pure Michigan,” “Michigan Film & Digital Media Office” and “MIFIA” logos somewhere in the project. As a transferable tax credit, a company who receives the credit could later sell the credit to another entity with a Michigan tax liability should the company who originally received the credit not have any tax liability of its own.
- Create tax credits worth 30% of spending for hiring Michigan residents, and 20% for hiring nonresidents to work on a project.
- Outline eligibility requirements for companies to receive the tax credit. To be eligible, companies would have to keep track of the individuals they hire from the state to work on the project, maintain receipts of what spending they do in Michigan and which vendors they work with, as well as other economic data.
- Set minimum spending levels for projects — commercial and advertising projects, as well as films 20 minutes and shorter would have to spend at least $50,000 in Michigan to be eligible. Film projects longer than 20 minutes would have to spend at least $300,000.
- Define which media projects wouldn’t be eligible: Projects with “obscene matter,” news and sports broadcasts, political advertisements, radio programs, weather programs, fundraisers, reality television and more wouldn’t be able to receive the credit.
- Would establish a 10-year “sunset” for the incentives program, meaning the program would be shuttered 10 years after its implementation. Supporters say this sunset clause would allow lawmakers to fully gauge if the incentive program had an adequate economic impact.
- Set caps on how much in tax credits the state could distribute under the program: For projects shorter than 20 minutes, a maximum of $25 million in credits could be approved in the first three years of the program; followed by a maximum of $50 million in credits in the next three years; and a maximum $75 million in credits for the final four years. For longer projects, the maximum credit allocations would be $100 million, $150 million and $200 million for the three time periods. Any money left over could be carried over to the next fiscal year.
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The credits would be distributed based on the money spent by a company filming in Michigan rather than an all or nothing approach, said Alexander Page, legislative chair of the Michigan Film Industry Association (MIFIA). The group is a key backer of the legislation and had input on the crafting of the bills, Page added.
At least 35 states, plus Washington D.C., Puerto Rico and the Virgin Islands, currently have some form of incentives for the film industry, according to the National Conference of State Legislatures. MIFIA places the figure even higher at 41 states. Both totals are down from a peak of 45 states in 2010, with the economic downturn around that period being cited as a reason for some states rolling programs back, per the NCSL.
When crafting the legislation, Page said, MIFIA looked at incentive programs around the country to discern what would work best if implemented in Michigan.
“We talked to other states to see what worked and what didn’t,” he said. “We worked with the Motion Picture Association, with (accountants) to see what worked and what didn’t. We also wanted to work with economists and the state to find out what was the best way of getting the return on investment to be more Michigan-centric, that’s the reason why it’s multimedia jobs.”
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