Lost another movie.. just the beginning thanks to Rick and company

In Cleveland for the week and they are already boasting on their news and radio broadcasts that they have lured the movie "The Avengers" with Robert Downy Jr from Detroit /Michigan. They are so glad as they "want the jobs and publicity "these ventures bring. They stated that Michigan governor Snyder is in the process of eliminating most film credits so this a great opportunity for Cleveland /Ohio to pick it up. The news commentator stated. "What are they thinking up there?? I heard they were doing a good job with the film industry but we are more than glad to take it over" "We are very glad to show the industry what Cleveland has to offer and a very friendly business climate". Good old Michibama and our backwards ways will get us no where down the road. What a major step backwards for our city and state, just unbelievable. We really need to lobby this before it totally explodes in our faces.

I'm glad I checked your profile before commenting because I was going to ask you if you understood how costly the tax credit approach is to the state. Since you're a CPA you probably understand it quite well, which is great because I don't get how giving a 42% refundable tax credit to film makers is a sustainable approach.

I don't know how Ohio is getting over on Michigan since their budget allowed for $30,000,000 [[$10M/$20M) over two years for movie rebates.

If the concept is sound I don't understand why most states have a cap for the amount of money spent on rebates.

Ohio's budget will be realeased soon and we'll see how much money Kasich wants to spend on these movies. Financially speaking they're in worse shape than Michigan.

I've been looking at these credits as a public investment in a new industry. If we think of them as such, they won't necessarily pay for themselves today; if they work, however, they will pay for themselves handily in years to come.

We might decide that there is little long term likelihood of attracting the film industry to Michigan on a more permanent basis and its not worth our money. On the other hand, we might decide to tailor our "investment" to an industry that could locate here more easily, like the video game or recording industries.

1953

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Originally Posted by rjk

I don't know how Ohio is getting over on Michigan since their budget allowed for $30,000,000 [[$10M/$20M) over two years for movie rebates.

If the concept is sound I don't understand why most states have a cap for the amount of money spent on rebates.

Ohio's budget will be realeased soon and we'll see how much money Kasich wants to spend on these movies. Financially speaking they're in worse shape than Michigan.

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You're talking about John Kasich. The same John Kasich that pissed away millions of dollars to build high-speed rail in his state. The same John Kasich is eager to kill worker rights. Kasich is going to more thrifty than Snyder when it come to tax credits for the movie industry. I serious doubt movie makers will be flocking to Cleveland or anywhere else in Ohio anytime soon.

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Originally Posted by 1953

I've been looking at these credits as a public investment in a new industry. If we think of them as such, they won't necessarily pay for themselves today; if they work, however, they will pay for themselves handily in years to come.

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I don't see this as an investment for years to come... as we have clearly seen, the second you stop throwing money at the industry, it completely disapears. Why aren't we using this money to lure companies to set up something more permanent [[ie, HQ, manufacturing facility, distribution center)?

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Originally Posted by detmsp

I don't see this as an investment for years to come... as we have clearly seen, the second you stop throwing money at the industry, it completely disapears. Why aren't we using this money to lure companies to set up something more permanent [[ie, HQ, manufacturing facility, distribution center)?

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Outside of California, New York, Illinois... and maybe Georgia... there aren't many states that have TV shows from a major network's studio fully produced locally. How many actors and production staff on Detroit 1-8-7 pay Michigan taxes? Heck, would the Chrysler Super Bowl ad have even happened without the film credits???

The tax code probably does need to be addressed, but the method has left a bit to be desired. We're talking about a government here, not a corporation where investors react immediately in both positive and negative ways to quarterly financial reports.

Michigan is quickly becoming a bigger laughing stock than it has been for the past four decades or so. Sad.

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Originally Posted by DetBill

Good old Michibama and our backwards ways will get us no where down the road.

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You know that Obama isn't the Governer of Michigan, right?

Someone has to pay for the lost tax revenue from the business [[welfare) tax cuts.

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Originally Posted by iheartthed

Outside of California, New York, Illinois... and maybe Georgia... there aren't many states that have TV shows from a major network's studio fully produced locally. How many actors and production staff on Detroit 1-8-7 pay Michigan taxes? Heck, would the Chrysler Super Bowl ad have even happened without the film credits???

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I'm not doubting that all of this spending has created jobs. It just seems that it has created nothing but temporary jobs and as such cannot be viewed as a long term investment. Why not spend tax money on creating more permanent jobs?

Look at what has happened recently... Incentives for movies are in question, and the industry bolts and the jobs are lost. Incentives for brownfield sites and historic buildings are in question and did the book cadillac shut down? Did any of the jobs created by previous brownfield tax credits get lost as a result? No. Those incentives were long term investments, the film credits aren't.

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Originally Posted by Detroitej72

Someone has to pay for the lost tax revenue from the business [[welfare) tax cuts.

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Amazing to me that so many of those criticizing the across-the-board business tax cuts are the same ones crying over the loss of film credits.

http://michiganfilmreel.com/2011/03/...d-for-lansing/

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A rally is being organized for support of the film industry at the Capitol Building in Lansing on March 22, 2011.
The “6 for 1″ title comes from the recent study by the nationally regarded accounting firm Ernst & Young. For every dollar the state invests in the film industry, about $6 in economic activity results: people are hired, businesses are paid for goods and services, and people find a reason to live in Michigan! Details for the Lansing rally will be released as they are available

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To go along with what detmsp has stated:

I feel these incentives are part of a codependent relationship. Kind of like a girl with a druggie boyfriend. She buys him his drugs and knows it's wrong but says, "but he still loves me...." Sure these incentives bring money and jobs but how real and concrete are they? What is the true longevity of this industry coming to Michigan?

There was an article in the Freep a couple weeks ago when this budget was mentioned. It interviewed people planning on trying to get incentives for movies or shows shot in michigan. I believe there were 4 or 5 potential customers. 3 or 4 of them said, without any apology, they would just find a new spot to shoot if they didn't get the incentive. Just like that they would move on. Not, we would be sorry for the local economy, we would be sorry for the new businesses that were recently set up, or we sure would miss Michigan. Nothing. Just up and gone.

While this may be a decent investment now, and the growth certainly has been exciting, who is to say that in 2-3 years some other desperate state offers 45% break or whatever is higher than Michigan and we see our second industry melt down in less than a quarter of a century?

And honestly if these incentives had not been in acted a couple of years ago would our economy gotten any worse? Has it gotten dramatically better? I'm not sure really, but I am also not sure if we would have ever missed them in the first place. And really has this even been a tremendous boost in our economy overall? All I hear about is projected income still and it's been over 2 years. Sure it's been real for a handful of catering companies, people that have been able to help out on the sets or someone that has rented a condo to a star for a few months but that's all I have seen/heard about. Oh and some film studio who still hasn't gotten their shit together to open yet. Maybe we can woo the film industry from some other slouchy state in a few years when things are rightsized for us.

I would say maybe he could give a little more to the film industry but why? They'll just run away when that little more is gone anyway.

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Originally Posted by detmsp

I'm not doubting that all of this spending has created jobs. It just seems that it has created nothing but temporary jobs and as such cannot be viewed as a long term investment. Why not spend tax money on creating more permanent jobs?

Look at what has happened recently... Incentives for movies are in question, and the industry bolts and the jobs are lost. Incentives for brownfield sites and historic buildings are in question and did the book cadillac shut down? Did any of the jobs created by previous brownfield tax credits get lost as a result? No. Those incentives were long term investments, the film credits aren't.

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The Book Cadillac was rehabbed almost 5 years ago; it's not shutting down. But how many other Book Cadillac type of rehabs will we see in the future?

I think we agree that long term tax credits aren't a good policy. But these aren't meant to be long term... And when you've got an apparent winner why unnecessarily sacrifice it in order to make an ideological point? Why couldn't he just say "we'll offer this much money until we get our tax code straightened then we will renegotiate"? He could justify the temporary favortism by the amount of growth that the industry has shown over the past several years in the state.

How much tourism interest has been generated in Detroit because images of the city are being broadcasted around the globe? How many convention decisions have been tilted in the favor of Detroit after 111 million people saw the city displayed during a 2 minute Super Bowl ad? Again, I'm not saying that the governor is wrong in his ultimate goal, but the execution is a bit left to be desired.

ETA: I'm viewing this from outside the Detroit bubble. I live in New York. I notice when I see Detroit in media, and I'm seeing it a LOT. The people that I work with and socialize with who know I'm from Detroit always mention it when they see the city depicted somewhere. It's usually "wow, I didn't know Detroit had that" or "Detroit looks nice", "Detroit's a real city", etc. That kind of exposure is invaluable. The film industry is just another competitive advantage that Detroit and Michigan has right now that it could use to turn itself around. Chicago would never fumble away an advantage like that. And it's well documented that migration patterns, especially foreign immigration, tend to favor locations where immigrants are most familiar. And immigrants become most familiar with American cities through the media. Just sayin'...

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Originally Posted by iheartthed

I think we agree that long term tax credits aren't a good policy. But these aren't meant to be long term... And when you've got an apparent winner why unnecessarily sacrifice it in order to make an ideological point?

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That's the point. If the tax incentives are not permanent what will make the industry permanent when the money is gone? Hollywood will not pay more to make shitty movies just because there is a local economy attached to it.

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Originally Posted by adamjab19

That's the point. If the tax incentives are not permanent what will make the industry permanent when the money is gone? Hollywood will not pay more to make shitty movies just because there is a local economy attached to it.

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If you offer them the incentives and then work on bringing your corporate tax code into reality then the industry will feel more comfortable about setting permanent roots. Building studios, producing more TV shows locally... Hell, maybe even the next Oprah could be launched from a studio in Detroit.

Having "The Avengers" move out of Michigan due to the cut in film tax credits is a BS story. The film planning was far enough along that its credits in Michigan wouldn't have been lost.

I don't know why we chose to play such a costly game of pick-an-industry. Michigan didn't have any preexisting competitive advantage to attract the film industry, so we had to compete on cost. Why we chose the most cutthroat industry with the worst deal for the state government still mystifies me.

We're paying out 42% of SPENDING as a tax credit. Shoot a movie for say, $10 million. Make $6 million back from theatres, DVDs, etc. A money loser? Not in Michigan. The State of Michigan [[me and you) will write the film company a check for $4.2 million. This is insane.

If we as a state are going to spend $4.2 million to incent some industry to locate and grow here, why not choose one in which we have some non-cost advantage [[EV batteries or advanced manufacturing, for example). And why choose an industry where you have to pay through the nose to compete with other states. Why choose an industry that can and will [[as reality shows) up and leave for better deal. After all, they left where ever they used to shoot to come here. Where was their loyalty to those other states?

I think a lot of film subsidy supporters don't realize how expensive and fleeting it is compared to other alternatives. For example, say we want to give an incentive to manufacturing companies to come here. Let's eliminate the entire Michigan corporate income tax [[proposed at 6% of income) for those companies. That's 6% of PROFIT, not COST or REVENUE that it costs the state in foregone tax receipts.

If the manufacturing company has revenue of $10 million and a fairly typical net profit margin of 5% they make $500K and have expenses of $9.5 million. They'll pay income tax on that $500K of profit at a rate of 6% which equals $30,000. So eliminating that company's state income tax costs us $30K. If that was a film company, we'd give them 42% of $9.5 million, or $3.99 million.

Both spend $9.5 million in our state. One we give $30,000, the other gets $3,990,000. You could eliminate corporate income taxes for 133 manufacturing companies. In total they'd spend $1.26 BILLION in our state. Or we can give the store away to some film studio that spends $9.5 million here.

See why the film credit is so stupid?

Huge applause, det!!

That's is why you all want to recall the NERD! He's no politician just a business man who downsizes companies to save money just like he downsized Gateway. Those who voted for the NERD should be ashamed of themselves for now examining political principles carefully.

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Originally Posted by Det_ard

We're paying out 42% of SPENDING as a tax credit. Shoot a movie for say, $10 million. Make $6 million back from theatres, DVDs, etc. A money loser? Not in Michigan. The State of Michigan [[me and you) will write the film company a check for $4.2 million. This is insane.

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Good thing that ain't how it works.

Not all of the benefits of an industry are financial. There might also be benefits to our image as the location of internationally distributed pictures.

That said, we could probably pick a better horse in this race than film. Its incredibly hard to decamp film from California and we arguably don't have many of the assets we would need to do so.

I would agree with others who suggest making the same sizable investment in industries where we are better positioned, such as advanced battery, etc.

1953

P.S. We may also want to have up-and-coming industries in our portfolio, even if we don't have many existing resources through which to court them. That's how we can gain the competitive advantaged - by cradling young industries.

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Originally Posted by SaintMe

You know that Obama isn't the Governer of Michigan, right?

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I think he is referring to combing Michigan and Alabama stupid.......