The tax credit bringing many Hollywood studios to Michigan could soon see some major changes.

Senate Bill 404, a bipartisan proposal that would top the film tax credit off at $50 million and reduce the available refunds by 7 percent, is being discussed.

The refundable film tax credits would be cut to 35 percent from their current rate of 42 percent.

The bill was introduced on March 25 and is sponsored by State Sens. Nancy Cassis, R-Novi; Jud Gilbert, R-Algonac; Tom George, R-Kalamazoo; and Mickey Switalski, R-Roseville.

“We recognize that Michigan has a significant, large deficit of $2.8 billion, and part of what’s contributing to that is the giveaway money to Hollywood producers,” Cassis said.

The bill would be keeping the film tax credit at $50 million, which would scale back a little on overly generous giveaway money, she said.

“These movie producers are currently not paying taxes in Michigan, but are still getting money,” Cassis said.

The bill would just restore funds to other areas of the state, such as police, fire and Medicare, she said.
Cassis said the bill also would support commercial ads and more jobs.

“We would be able to provide credit for commercials to be done here, and we would hire 90 percent of Michigan workers first,” she said.

In the long run, Cassis said, Bill 404 would recognize all the refundable credits that are not necessarily vital and giving relief to other businesses.

State Sen. Jud Gilbert said even though the majority is not in favor of the bill, it is still necessary.

“The bill is necessary because films last for a short duration, which means the money will run out before anyone gets the subsidy,” Gilbert said.

He said the bill would divert money into a tax relief.

“If the bill passes, people will see gradual employment increases in small businesses with longer durations,” Gilbert said.

Change may not be noticeable yet

Kevin Corbett, a broadcast and cinematic arts professor, said it is too soon to tell if the bill should be approved.

“It’s probably going to be at least five years before we can tell if the state needs to cut back on the film tax credit,” he said.

Corbett compared Bill 404 to a study on New Mexico’s current film tax rate. The study from Ernst and Young showing New Mexico’s film tax rate results at 35 percent was a five-year study, which meant it took five years to be able to tell if the tax rate was working for the state or not, Corbett said.

“Michigan’s current rate at 42 percent has only been in effect for 18 months, so it’s too soon to tell if we need to lower it or not,” he said.

The bill will not produce more jobs in Michigan or provide stamina for Michigan filmmakers, he said.

“There would be fewer filmmakers so, at 35 percent, the bill would generate even fewer jobs,” Corbett said. “If we keep the current rate, it could give Michigan film industry workers a chance to move up to the higher end of the film industry.”

E-mail the author: Chelsea White