The Dollars and Sense of the Newly Proposed Michigan Film Tax Incentive

By Peter Klein,

Director of Photography
and MIFIA Executive Board member

Michigan is an extremely enticing location for motion picture storytellers. Our industrial cities, farmlands, dunes, lakes and rivers, and miles and miles of stunning Great Lake shoreline are only some of the visually spectacular settings that make it “Pure Michigan.”  We need to diversify our economy and bring filmmakers here to utilize our beautiful state and employ our world-class workforce now.

The Michigan House and Senate, under bipartisan sponsorship, are going to be voting on newly constructed legislation that brings a film tax credit to our state. Forty other states and municipalities are benefitting from the ever-growing multi-billion-dollar film industry.  The loudest debates on this bill focus on the program’s “cost verses value,” so let me offer some facts about the issue. 

Many industries have benefitted from state-sponsored incentives, the automotive industry, education, and commercial real estate, to name a few. There are costs that go along with helping industries grow and produce jobs. Incentives are necessary and have obviously proven the monetary value as evidenced by 40 U.S. states and municipalities with film incentives. 

Film production is a robust manufacturing industry and will benefit Michigan by positively impacting industries like catering, lodging, location rentals, lumber yards, and equipment rental with thousands of new jobs and millions of dollars in new business. 

Opponents of film incentives spin the scenario this way:  the movie business is full of wealthy producers, directors, and A-list actors who certainly don’t need financial help to launch their productions and inflate their salaries. That’s a gross misrepresentation of reality. A large percentage of jobs in the film industry are blue-collar — camera operators, set designers, electricians, lighting professionals, makeup and hair stylists, construction workers, and countless other support staff. 

The film industry has also been misrepresented as an “in-and-out” business. Critics say that the jobs new movie productions will bring to our state won’t offer consistent or reliable income. Not true. While most film workers are hired for a specific period of time, project to project, their yearly average incomes average between $55,000 and $75,000. That’s on par with teachers, automotive factory workers, truck drivers, and middle managers. And much of the industry is supported by union labor, which means medical and pension benefits go along with the jobs. 

Cities compete to host the Super Bowl, as Detroit did in 2006, not for the ticket sales alone.  The total value of the investment is a host of ancillary businesses, e.g. hotel, restaurant, hospitality parties, parking lots, etc., that produce the millions of dollars of return on investment.  We saw firsthand how that helped spark the renaissance in Detroit.  The same is true with building a sustainable film industry. Plus, the enormous positive exposure that our beautiful state receives from being onstage for the world to see often results in a boost of tourism and/or future real estate and business investment. 

Often, impact studies focus on the “ticket sales” and not the holistic economic and intrinsic value.  And not all studies apply the same metrics and multipliers when evaluating the revenue output verses the economic investment. By applying 1 tax dollar spent returns X amount tax revenue back, no incentive program pays a dollar return on a dollar invested. 

The bills that are being considered have been crafted from scratch and have examined other state film incentives to build a fiscally responsible and sustainable film industry in Michigan. The bills favor Michigan jobs and small business activity. 

The tax credit bills have a higher credit for in-state labor, and a licensed Michigan independent CPA must verify this and all qualified expenditures.   The program is a transferrable and non-refundable tax credit.  An applicant to the program receives a voucher or credit upon completion of a production against a future Michigan tax liability, ensuring that the money never leaves the state. It’s crucial to understand the specifics of this newly proposed film credit.  People who oppose the new tax credit legislation are using the old film rebate program of 2008-2014 to fuel their argument. This is not a rebate like the old bill. 

The proposed film credit of 30% means Michigan would be receiving 70% of the millions of dollars in new state spending & tax revenue. The lost opportunity of having the incentive means Michigan would miss out. 

Consider what other states have accomplished in attracting the film industry to produce thousands of jobs and big economic impact for many small businesses.  It’s time for Michigan to get back in the business. The bill is drafted, and the vote is coming up. All we need to do is vote, “yes.”

The Michigan Film Industry Association Board is available for interviews. Please contact lorri@edgepartnerships.com or 517-499-7435 to schedule a time. 

To learn more about the proposed legislation, please visit https://mifia.org/About-MiFIA.