State Representative Justin Amash Accused of Not Compromising on Film Tax Credit
State Representative, and RLCMI advisor, Justin Amash has recently been accused by critics of “not compromising” on the Michigan Film Tax Credits. During a rally at the State Capitol earlier this week, Deb Havens, chair of the West Michigan Film Video Alliance, accused Amash of being just another politician who plays “off on their own agendas, rather than what is best for the state and the people of Michigan.” Ms. Havens seems convinced that Amash’s ideology has nothing to do with sincerely held beliefs, and she also seems convinced that she, and not Representative Amash, knows what is best for the people of Michigan. The irony is that Havens explains Amash’s argument quite clearly stating he is “committed to no incentives…the idea being that if we get rid of all incentive programs then we can get rid of the Michigan business tax, and we won’t have to tax our businesses to pay incentives, therefore, get rid of all incentives.”
People like movies. They make us laugh, cry, and scream. But is the film industry any more important than other sectors of economy such as manufacturing, which is comprised of companies who have been here much longer, and who are the ones paying to attract to newer, out-of-state industries. No one is holding a rally at the capitol on behalf of the garbage industry, even though importing waste from other states and Canada has been a growing business in Michigan in recent years. It must not be as sexy as the movie industry whose growth clearly furthers Ms. Havens personal agenda as Chair of the Michigan Film Video Alliance (read “special interest” group).
And this issue also touches upon another big problem in Michigan politics, that being economic populism. For example, Michigan State Senator Nancy Cassis has been one of the most conservative voices in legislature over the last decade. And while she has rightfully questioned whether the film incentives are actually working, her proposed solution “that 90 percent of the people working on a movie or national ad production must be from Michigan” is also faulty. A parochial restriction that dicates to business that they must hire locally is likely to discourage them from locating in Michigan in the first place. However, this is the price that the private sector should not at all be surprised of paying when they receive government handouts (see the earlier post “Be Careful What You For” concerning the American auto bailouts).
Nor is Cassis’ argument that we should simply “right-size” the film credits by reducing the refundable amount of production costs from 40 percent to 42 percent, down to 35 percent all that convincing since, according the Anderson Economic Group, “the nominal tax expenditure is, at best, a rough guess, and probably an overestimate of the actual ‘cost’ of the program.”
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3 Responses to “State Representative Justin Amash Accused of Not Compromising on Film Tax Credit”
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Having read your post, and heard of the event you describe from the woman you quote in your article, I am pleased to say I have considered both sides of the argument. Being an out of state observer- and former resident of Michigan- I have spent some time studying the situation with mixed views. On one hand, the idea that Michigan could tap an unused resource by utilizing the creative community as more of a participant in local economy sounds rife with possibility. On the other hand, convincing local business owners to invest in a business that has a less than respectable reputation seems insurmountable.
From where I sit, the local economy in Michigan is hurting- while perhaps not so severe as what we face in California, it is far from its prime and the unemployment rate is increasing.
So, what is a reasonable tactic? Why not follow economic models already established in other states- like North Carolina, New Mexico, Texas- states which have chosen to embrace their creative community, not shun them into some under utilized corner.
By embracing the film industry in Los Angeles, New York and markets outside of the United States, Michigan has the long term potential to build a thriving, sustainable economy, which by its very diversity would support several locall industies.
A few simple clicks through common search engines like google will verify what I say. But I wonder how willing those named and unnamed political leaders will do the research, will learn what the advantages are? As in most political arguments, these few meager talking points are repeated over and over, regardless of what other ideas may arise which would benefit all.
For me, that is the biggest advantage to exploring this tax incentive. Explore it as a first step to a larger, stronger economy. Or continue with what you’ve been doing for decades and simply run the risk of driving the state into such financial ruin that not even your own bank accounts are safe from vacancy.
I do not believe the tax incentive alone is a miracle cure. I do believe Michigan has the ability to position itself strongly in a way that would serve the state over decades, rather than a congressional term. These arguments are sound, but in an unstable economy, change is inevitable- will you embrace it responsibly? Or will you wait for whatever happens, and react far too late to truly be effective?
“Or continue with what you’ve been doing for decades and simply run the risk of driving the state into such financial ruin that not even your own bank accounts are safe from vacancy.”
Keep in mind that you can just as easily run the state into financial ruin by “exploring” with new programs that are not lucrative enough for the private sector to invest in alone.
“The Michigan Department of Treasury and the nonpartisan Senate and House Fiscal Agencies have estimated that the film credit could cost the general fund $100 million for the full 2009 fiscal year and $150 million in fiscal year 2010. The report also states that the credits created 2,800 jobs. However, these jobs only lasted for an average of 23 days. According to the Senate Fiscal Agency (SFA), when the
number is annualized the result is 254 jobs.”
http://www.senate.michigan.gov/gop/senators/cassis/Film%20Tax%20Credit%20Letter.pdf
It only “cost” the state tax revenue that it would not have had anyway. The film industry -would not- come to Michigan without the tax incentive.