Tuesday, December 7, 2010

Re: [MISP] Fwd: RE: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS


Great example Sam. You forgot to factor in the taxes paid for employee(s) and other costs of renting that room, like sales taxes on lets say that roll of toilet paper etc or maybe the gas tax that was paid when the driver picked that person from the airport. Cost of business divided by number or rooms rented and figure out percentage of taxes paid. I would say that 18% is on the top end but I think you will find that it pretty close. Now factor in the state taxes from the recycling of the dollars.


On Dec 7, 2010, at 6:53 PM, Sam Levy, NET MAN wrote:

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Again, not true.

The "other 18%" must come from state coffers, which are generally those in the general fund obtained through other taxes.

The "further example" of hotel, gas, corporate - if qualifying expenditures are made on those items, the expenditure itself is still rebating at 25%, not the tax on the expenditure.

As an example, you make a film, you rent a hotel room.

The hotel room base rate is $100

The gross receipts tax may be $7
The lodgers tax may be $6

Total amount you pay for the room is $113

The 25% tax rebate pays you back 25% of $113, or $28.25

While the state and the lodgers tax (which I don't think goes to the state it goes to the county, but I'm giving you a generous example here - so for the purposes of the example, just assume that the lodgers tax were to go to the state too) total only $13, the state writes you a check for $28.25

The "other $15.25" has to be paid from other sources.

Many other film expenditures don't have added taxation, so you're only looking at the approximate $7 revenue in to the state goverment, of which it is still writing a check out for $26.75.

As previously mentioned, there ARE valid arguments that the mere spending of the underlying $100 circulates back through the economy and eventually may bring in enough money to pay for the additional amount, the original amount being paid out directly on the expenditure amounts to around 3.5 times the amount of money the state government actually received in taxes.

If the film were never made, and you never rented the hotel room and never paid your $113, then the "other 18%" of rebate funds WOULD still indeed be in the state government tax coffers.

Do I need to draw a picture?

s

On 12/7/2010 18:38, Kenneth Knoll wrote:
***This is a MISP Listserv message. Responses are sent to the list by default.*** ***For more info about MISP and the listserv, scroll to the bottom of the page*** * It is a rebate not only on taxes paid directly into the state coffers, GRT and State Income Tax. Additional Hotel and Gas taxes and Corporate taxes are rebated along with other taxes the state receives on production money spent within the state. The Arrow Head Study pointed out that GRT, State Income Tax and Corporate Taxes represent 78.63% of the taxes received. The balance coming from other taxes. My point still is that the assumption that those funds will be there for other services is not factual. 

On Dec 7, 2010, at 6:01 PM, Fritz wrote:

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Assuming a production wouldn't have been produced here without the rebate, it would seem the only amounts directly "paid in" to state coffers as a result of the production are either GRT or State Income tax, and the latter only if the employees have enough income in the year to be ineligible for a refund. That means some amount less than 25% (I'd guess around 18%) would be paid back to the producer/production from the "general fund." If the production would have been done even if there were no rebate (that being the case with the current production I'm working on), then the taxpayer is in effect subsidizing the full 25%. 


Whether the subsidy provides secondary benefits that exceed the amount of the subsidy is a different matter, which is certainly what the various studies have tried to ascertain, and which I think will be the heart of the upcoming political debate that decides how much of the subsidy to keep in place.

Fritz

 

-----Original Message-----
From: NM Media Discussion List [mailto:MISP-L@unm.edu] On Behalf Of Kenneth Knoll
Sent:
Tuesday, December 07, 2010 4:04 PM
To: MISP-L@LIST.UNM.EDU
Subject: Re: [MISP] Fwd: RE: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS

 
 
 

 "However, these subsidies are so lavish that governments must cut vital public services to pay for them."

 

The basic assumption that the money will actually remain in the general fund if you cut subsidies is wrong when applying it here in New Mexico. It is a "rebate", a return of money paid in. If the money is not paid in due to loss in production that money will not be available to pay for other services to begin with. To argue the added value is something that is hard to measure but we all see the benefits everyday. You can't rob Peter to pay Paul when Peter never had the funds in the first place. 

 

On Dec 7, 2010, at 2:43 PM, Stacy Sacco wrote:

 

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I thought you might all want to see the response from the folks at CBPP to my email from last week.  I certainly appreciate there having responded to my email and I would imagine would enjoy being part of this continued dialog.    Happy holidays to all.  Stacy

 
 

-----Original Message-----
From: Shannon Spillane <spillane@cbpp.org>
To: SASacco@aol.com
Sent:
Tue, Dec 7, 2010 2:04 pm
Subject: RE: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS

Sue,

 

Apologies for the delay in responding to your emails from last week.  Thank you for sharing the list serv dialogue with us.   My colleague, Dr. Bob Tannenwald, has written up a short note in response.  We invite you to share these comments with the list serv if you like.  Please find them below.

 

Kind regards,

Shannon

 

Shannon Spillane

Deputy Communications Director for Strategic Initiatives

Center on Budget and Policy Priorities

Phone: 202-408-1080

 

Response from Dr. Robert Tannenwald

Thank you for the discussion of my new report and for sharing with me your robust debate about this issue.  I appreciate the opportunity to respond briefly to a few of the points made in the list serv exchange.

 

First, I do not dispute that, by offering film tax subsidies, states induce producers to shoot movies within their borders. However, these subsidies are so lavish that governments must cut vital public services to pay for them. While residents get some work on movie productions, others lose their jobs as governments cancel contracts with vendors and lay off workers. For example, construction workers lay idle as maintenance, repair, and modernization of infrastructure are postponed. Teachers, police officers, and firefighters get let go. This has a ripple effect through the state economy.  The laid off workers struggle to pay their rent, to support their families, and to make car payments. As their household budgets shrink, they spend less at the grocery store and other local businesses. The resulting economic drag wipes out the economic gains that movie making appears to generate. In short, film tax credits make governments rob Peter to pay Paul.

 

To make matters worse, a large chunk of the benefits from film production goes into the pockets of nonresidents— out-of-state media pros. This is true even in New Mexico, where the state pays colleges and universities to train residents for media jobs and eligibility for its film tax credit is partially limited to residents. (A close reading of the New Mexico Film Office's study offers evidence on this point).

 

Some other points:

 

Arizona does have a film tax credit, with an appropriation of $70 million, the same order of magnitude as film tax credits paid out by New MexicoArizona is discontinuing its film tax credit, effective December 31.

 

True, other industries get government subsidies. Most of these subsidies are just as wasteful and ineffective as the film tax credit and deserve scrutiny as well.  This report, however, focused on film tax credits in particular.

Movie producers moved back from Canada in large part because the Canadian dollar appreciated rapidly against the American dollar (by 50 percent) in the early part of the decade.

 

Thank you for your consideration of these points.

 
 
 
 
 

From: SASacco@aol.com [mailto:SASacco@aol.com]
Sent:
Wednesday, December 01, 2010 6:41 PM
To: Shannon Spillane
Cc: Bob Tannenwald
Subject: Fwd: [MISP] STATE FILM SUBSIDIES: NOT MUCH BANG FOR TOO MANY BUCKS

 

Just curious.  Does the CBPP have a process for reviewing and responding to comments regarding your reports, as noted in the following email?  Thank you.

 

Stacy

 

From: acw232@GMAIL.COM
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