Movie Tax Credits

Over at Reason, David Weigel draws attention to Canadian tax policy as a financier of films, such as Young People F***ing. Just south of the Eh State, Michigan State Senator Nancy Cassis (R-Novi) criticizes a similar initiative.

According to the nonpartisan Senate Fiscal Agency, the credit will bring $17 million into Michigan through income and sales taxes in fiscal year 2009. Yet due to the payouts to film companies, the credit will reduce the Michigan Business Tax revenue that year by $127 million -- for a net loss of $110 million.

One reason for this loss is that the film credit is a "refundable" one, which means that if a company's credits are more than its tax liability, the state will send the company a refund check. Such credit "cotton candy" may be sweet, but it provides no real nourishment to our economy.

As she notes in the article, she was the only Michigan legislator to vote against the Film Tax Credit.