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Connecticut and Wisconsin end film tax credits while California doles out state money for productions

June 21, 2013

While the entertainment industry and Sopranos fans mourned the unexpected death of actor James Gandolfini, some state legislatures were killing off movie and television production tax breaks.

Connecticut and Wisconsin legislatures have proposed ending their states' film tax credits.


Hunger-Games-movie-Post-Production-31867284-1280-720-via-katniss-peeta-dot-com
The Hunger Games, post-production, courtesy Katniss-Peeta.com

Connecticut film credit cuts: In developing Connecticut's state's two-year $44 billion budget, lawmakers decided that the Nutmeg State could no longer subsidize movie
productions.

The film tax credit moratorium is expected
to save the state $6 million.

"My gut tells me (the film tax credit) was break-even at best," State Sen. L. Scott Frantz (R-Greenwich) told CTPost.com. "The reason for (my hunch) is these film crews come and
go. Do they use local catering companies and service support companies?
Yes, they do. But they leave as quickly as they come."

TV, digital tax breaks remain: But television production crews can breathe a bit easier, at least for now.

Connecticut budgeters decided to keep state tax credits for television and digital animation
companies. The TV tax breaks allow qualifying creators to recoup 30 percent of their
in-state production costs.

Politicians on both sides of the aisle say Connecticut's return on TV and digital tax breaks is much more quantifiable than the economic benefits of film projects.

Film industry jobs often require specialized
skills, such as special effects and CGI, meaning production studios tend to bring their own out-of-state workers
to the local sets. The moviemakers also are in and out of an area relatively quickly.

Television and digital enterprises, however, typically have longer production runs. That means a larger and lengthier economic presence.

Wisconsin whacks film tax credits: There is similar economic skepticism among Wisconsin Assembly members about entertainment production tax breaks.

Badger State lawmakers passed a budget this week that ends film and video tax incentives.

This is just the latest backlash against entertainment tax breaks in the state. Wisconsin's program originally included a 25 percent tax credit from Wisconsin on
wages, salary and production costs. The maximum was reduced in 2009 to
$500,000.

The most high-profile tax credit taker was
"Public Enemies," Michael Mann's 2009 gangster film starring Johnny Depp and Christian Bale, which filmed
several scenes in Wisconsin.

But many Wisconsin lawmakers felt that film and TV tax breaks at any level just don't provide enough bang for the buck in terms of creating jobs and producing other state revenue.

Competition for California credits: Meanwhile, Hollywood's home state is continuing to hand out tax breaks to productions.

This week, the California Film Commission reported that 380 TV and film projects applied for a piece of the $100 million in tax credits the state
allocates annually.

That's a nearly 20 percent increase over last year and a new record for applications.

But because of limited funds, only 31 of those 380 applicants were approved for funding.

More states rethinking film, TV tax breaks: The Golden State, however, seems to be the national exception.

Since 2010 when a record 40 states offered film and TV tax credits, the incentives have fallen out of favor. At last count by the Tax Foundation, 37 states offered these tax breaks.

Part of it is purely economic. As states suffered through the recession, many programs had to be dropped.

Then there was the tax credit fraud. Most notable was Iowa, where prosecutors got convictions or guilty pleas in seven of the 10 cases in
which they pressed criminal charges against film credit figures.

Does your state offer tax credits to movie and television productions? What about digital enterprises, such as video game creation? Do you think the tax breaks are worth it?

You also might find these items of interest:

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It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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