Michigan Film Incentives on the chopping block...

[Meryem Ersoz]

Which brings me back to what I was trying to tell you in my last post. What you're saying just isn't the case, even though you seem to be convinced that it is. !

Listen to Mike. Aim high. Ignore the end of state tax rebates. They really have little to nothing to do with your ability to get a job.

Tax incentives have benefited the few, not the many. The biggest de-centralizing force in film production is deflationary technology - not tax incentives.

 

[Stephen Pruitt]

Missouri is very likely to end its tax credit program, as well. We were likely the last film to get any money from the Missouri state program (for our feature, "Terminal"), but our films are definitely small potatoes.

As it happens, Missouri has had two best picture nominees over the past two years: "Up in the Air" and "Winter's Bone" Now, it seems, there may not be any more.

Stephen

 

[Tom Greenberg]

Just to clarify the situation on the ground here in Michigan, the Governor has proposed a budget which caps the incentives at $25M annually. Currently there is no cap. This budget has yet to be passed by the House and Senate, and there are a number of Representatives and Senators that have said they still support the incentives. So, the Michigan incentives are not quite dead yet (although they are certainly on life support).

Are film incentives a way to "buy" production business? Yes, absolutely they are. However, it is a time-honored way to attract productions to an area that is not currently a production destination. Michigan has had an active, thriving commercial, corporate, and EFP production industry for decades, but features have been few and far between. In the interests of diversification from our "native" industry, the auto biz, the decision was made to try to attract the film industry because it is highly mobile, spends a lot of money, and requires minimal initial infrastructure. In other words, positive results would be seen very quickly. The original plan was to implement a very aggressive policy that would be in place for 5 years, and then scale it back incrementally as infrastructure, trained labor, and support services were created.

At almost 3 years into the process, over $650 Million dollars in overall film revenue has come into Michigan and roughly $225 Million dollars in rebates have been authorized. That means that over $400 Million in direct revenue has stayed in the state, not to mention the indirect revenue that has come from those dollars working their way through the economy. When the process started, there was a shortage of trained below the line labor, but Michigan colleges and schools have geared up and others have moved here from out of state, so now there is now a pretty plentiful labor pool.

Those of us in Michigan that have worked to build this industry are still fighting hard to keep it alive. There is a vibrant, passionate, committed community of film workers who want to work at their craft and live here in Michigan. I hope they have that chance...

 

[Chris Ratledge]

...Ignore the end of state tax rebates. They really have little to nothing to do with your ability to get a job.

I would say that's not exactly true. When there's a rapid increase in available feature work, more than saturating the existing crew pool, there are potentially many more employment opportunities that weren't previously available.

You have to have a certain amount of skill but everyone has a 'first' job. Where the incentives have way less to little influence on employment is getting repeated job offers from the same people. That's all you. Or maybe better said, their opinion of you.

Tax incentives have benefited the few, not the many. The biggest de-centralizing force in film production is deflationary technology - not tax incentives.

What exactly constitutes 'few' from 'many' in your statement here? I'd agree that at least as far as the rebates go, the monetary amount for the few at the top (as individuals) is greater than that of those towards the bottom. But there certainly have been a LOT, I'd say "many" people who have benefitted from tax-incentivized filmmaking, not just above the line.

 

[Meryem Ersoz]

it's robbing Peter to pay Paul - read through the thread - Toronto loses business to Michigan - Colorado loses business to New Mexico - et cetera. Very little is created, it is primarily migrated.

Tax incentives don't create new wealth, they just shift what is out there, around to different players. Perhaps this is oversimplifying a bit, but I doubt there are many movies which would not have been made without these incentives - they were just able to make them less expensively in different locations, for awhile.

my inner Austrian economist is showing...

 

[paulherrin]

i'm with you.

 

[Chris Ratledge]

it's robbing Peter to pay Paul - read through the thread - Toronto loses business to Michigan - Colorado loses business to New Mexico - et cetera. Very little is created, it is primarily migrated.

Tax incentives don't create new wealth, they just shift what is out there, around to different players. Perhaps this is oversimplifying a bit, but I doubt there are many movies which would not have been made without these incentives - they were just able to make them less expensively in different locations, for awhile.

So every film that was ever to be made, will be made just the same, regardless of the existence of tax incentive legislation?

While I can certainly agree to the real possibility of truth to the migratory nature of studio films, I believe that a key factor leading to MANY independent films with low budgets being eventually green lit, are the potential budget savings gleaned from film incentive programs. I've heard this from producers' mouths, FWIW. Would they have EVENTUALLY been made without some incentive program? Who really can say? I can't, but maybe. Timing is everything.

I've already lost too much sleep on this topic over the last several days. Time to crash and come back later! :Yawn:

 

[Frank Cueto]

There are sooo many diferent perspectives here.

I've been involved firsthand in many incentivized productions since prepro. Many of them have included the incentive as part of their budget (they sell the tax credits and use that money to pay production expenses). Only then did they manage to have enough budget to get greenlit.

So, at least in the projects i've been involved it, has allowed us to do more with less.

Some movies are getting done with 14mil. Producing them in LA was about 25Mil. So as you can see, its not only the incentive, its that producing in LA is damn expensive too.

There are many ways to see this, and in no way I mean to take value away from the expressions of fellow posters, JIC.

 

[George Butterfield]

This is great news for the "no budget", "indy", filmmaker. I don't need no stinkin' rebate! I don't want to steal from my neighbour, just to indulge my sickness.

 

[Meryem Ersoz]

So every film that was ever to be made, will be made just the same, regardless of the existence of tax incentive legislation?

I think that is very close to true. There might be a few films drawn into existence by tax incentives, but primarily films are pulled forward by human vision and drive.

I have a horse in this race, with rather large personal, financial stakes. I'm producing a feature film, shooting in May-June, and our state incentive program may or may not be available to fund it. Do you think this has any bearing whatsoever on whether I will push this project forward? Of course not! I would love to put a guaranteed 10% (our state incentive) back in my and my investors' pockets, at the end of the production. But do I take that to the bank, during a recession? No.

Iif I'm relying on state dollars to fund it, during a recession in which several US states are facing major budget shortfalls and either bailout or bankruptcy, then I'm the greater fool.

If you want guarantees and your personal risk profile doesn't support taking on a bit of risk and adventure and possibly failure, then film and freelance production are probably not your best option.

Let me add that I didn't start out opposed to tax incentives. My opposition has developed through observation. I have a friend who was very close to the action in the corruption of the Iowa program - it was rather heinous, even worse than what the papers have portrayed, and the Colorado plan has been an almost total bust locally, last year benefiting only 2 corporations (one is a wealthy publicly-traded company!) who would have pushed their productions forward with or without rebate checks.

Our state, which has great locations and great crew and used to attract filmmakers, now has zero chance of competing with New Mexico's 25% free money plan. Robbing Peter to pay Paul. If that program disappears, we are back to working on equal ground.

 

[Peter Strietmann]

90% of the wealth in America is held by .03 of the people. Spread the wealth.

 

[Chris Ratledge]

"The Avengers" just cancelled their Michigan plans.
http://mlnurl.com/eN9m

 

[M Most]

Some movies are getting done with 14mil. Producing them in LA was about 25Mil. So as you can see, its not only the incentive, its that producing in LA is damn expensive too.

I would say that producing in Los Angeles is not expensive, it's sensible and appropriate, especially when one considers the ease and convenience of having almost unlimited infrastructure, talent, and locations at your door, as well as the ability to sleep in your own bed every night. A Los Angeles production day is often far more productive than a distant location day, often for those reasons. Producing in incentivized locations is artificially cheap because the government is giving you money to come there. But just as with other businesses, governments eventually discover that they can't lure enough projects to create a sustaining industry just by giving away enough for a few productions, they have to go all in and understand that it's a process that can take years, if ever, to succeed. They also don't seem to realize just how well entrenched the studios are and that any productions that come their way are transient, temporary business entities that may or, in many if not most cases, may not lead to another one. That is the nature of the business they're trying to attract.

 

[M Most]

I think that is very close to true. There might be a few films drawn into existence by tax incentives, but primarily films are pulled forward by human vision and drive.

I agree with that. Most pictures that land in incentivized locations are bound to be produced somewhere. They're just comparison shopping and looking for the place that's willing to either give them the best deal, or the biggest bribe, depending on how you look at it. To me, they're usually one and the same.

 

[paulherrin]

I'm just curious, what kind of setups do our European friends have regarding this kind of thing? Sometimes they seem to be more established in the long haul...

I know that the UK at least, seems to put an importance on art and culture, financially. I"m not sure that's a bad thing...

 

[Steve G]

I'm just curious, what kind of setups do our European friends have regarding this kind of thing? Sometimes they seem to be more established in the long haul...

I know that the UK at least, seems to put an importance on art and culture, financially. I"m not sure that's a bad thing...

Sadly not. The new government in the uk is slashing art and culture funding. The Film Council, the govt backed agency for film production in the uk is being shut down. 25 % cutbacks in art and culture funding across the board.

Here in the uk, there is a complicated tax relief system for indigenous film making and some co productions, which gives back 25 % of qualifying film production expenditure (budget up to £ 20 million), 20 % for over £ 20 million.

http://www.ukfilmcouncil.org.uk

 

[Steve Sherrick]

I would say that producing in Los Angeles is not expensive, it's sensible and appropriate, especially when one considers the ease and convenience of having almost unlimited infrastructure, talent, and locations at your door, as well as the ability to sleep in your own bed every night. A Los Angeles production day is often far more productive than a distant location day, often for those reasons. Producing in incentivized locations is artificially cheap because the government is giving you money to come there. But just as with other businesses, governments eventually discover that they can't lure enough projects to create a sustaining industry just by giving away enough for a few productions, they have to go all in and understand that it's a process that can take years, if ever, to succeed. They also don't seem to realize just how well entrenched the studios are and that any productions that come their way are transient, temporary business entities that may or, in many if not most cases, may not lead to another one. That is the nature of the business they're trying to attract.

Sadly Mike, I think you have an accurate read on the situation. We have experienced the movie business tease here in Massachusetts and although there have been times when it has shown promise, there seems to be one constant - any attempts to build sustainable infrastructure have failed. Even looking at the promise of a true studio environment such as the one proposed for Plymouth Rock Studios is barely holding on by a thread.

As much as we would love to believe our industry is driven by artistic endeavors, it's really driven mostly by one thing - money! And that is what we have seen with these various tax incentive programs. To me, they too often end up being teases. Not the type you marry and build a life around.

 

[Dominic Cochran]

We were in business in Michigan for over 10 years before the incentives came and if they leave it won't affect our core business much. Of course it's definitely been a great 2 years and it's really sad to see our new governor and legislature be so short-sighted as to even consider pulling these so quickly. I'm also surprised to hear from Michigan folks here who think this is only helping a few people. You can't argue with the overall economic impact even if you've had problems getting crew jobs on these features. Sounds like sour grapes to me.

http://www.freep.com/article/201102...ives-bring-millions-state-coffers?odyssey=nav

600% ROI is pretty good for guv'ment work.

 

[mike ogden]

Here in the uk, there is a complicated tax relief system for indigenous film making and some co productions, which gives back 25 % of qualifying film production expenditure (budget up to £ 20 million), 20 % for over £ 20 million.

Actually the UK film tax scheme is not complicated and is being replicated elsewhere, like Germany, as a model of how to do it.

I think a lot of the comments on here are missing the point. The tax break(s) allows investors a comfort zone on their investment and its recoupment. Films are inherently risky, especially independent ones, so anything like this including a VAT rebate is appreciated. It's damned hard financing a film and no single investor or group will rarely give you 100% of a real film budget.

A region or country with a working tax break is there to attract the work for its industry, however small or large and it can be made to work because it's not 'free money' - it is equity that has to be repaid at a set percentage.

Not everything has to be shot in the expensive state of California or should be!

 

[M Most]

A region or country with a working tax break is there to attract the work for its industry, however small or large and it can be made to work because it's not 'free money' - it is equity that has to be repaid at a set percentage.

I don't understand what you mean by that. Can you elaborate? I just don't see where a government tax break represents any kind of equity, since they don't assume ownership of any of the assets or profits the picture might or might not make or have. Nor do I see how it gets "paid back." The only thing I see is a situation in which film producers pay a lot less taxes than any other business, even one that actually might create some permanent infrastructure and permanent local jobs. And on top of that, they get some of their expenses taken care of as well. Am I misunderstanding the situation?