This Just In ...

Kevin Fischer is a veteran broadcaster, the recipient of over 150 major journalism awards from the Milwaukee Press Club, the Wisconsin Associated Press, the Northwest Broadcast News Association, the Wisconsin Bar Association, and others. He has been seen and heard on Milwaukee TV and radio stations for over three decades. A longtime aide to state Senate Republicans in the Wisconsin Legislature, Kevin can be seen offering his views on the news on the public affairs program, "InterCHANGE," on Milwaukee Public Television Channel 10, and heard filling in on Newstalk 1130 WISN. He lives with his wife, Jennifer, and their lovely young daughter, Kyla Audrey, in Franklin.

Hooray for Hollywood? I don't think so

Given the positive budgetary impact of Scott Walker’s policies, the state finds itself with a surplus. Thus, the Governor has proposed a substantial income tax cut.

Since his proposal, newer, fresher numbers have surfaced showing an even bigger cut was possible. Riding in on a white horse is state Representative Dale Kooyenga who today unveiled details of his major tax reforms, an idea desperately needed in one of the biggest Tax Hells in America.

Kooyenga would end many of the state’s dubious tax credits. One of them is the Film Production Tax Credit.

Early on, I was sold. It seemed to me that if other states were cashing in on Hollywood picking up stakes and settling down in their territories to make movies, why shouldn’t Wisconsin get in on all the economic impact, excitement and fun. While filling in for Mark Belling on WISN one afternoon, I even invited the credit’s biggest booster, then- state Senator Ted Kanavas to come on the air and explain the benefits.

And how cool was this once the credit was approved.

One of the hottest, most popular movie stars would come to Wisconsin and the film crew would spend days here, spending money while making money in what was sure to be the production of a future box office smash.


Johnny Depp meets and greets his fans after a filming of "Public Enemies" at downtown Oshkosh April 14, 2008. Oshkosh Northwestern Photo by Shu-Ling Zhou
 

In theory it sounded great. In practice…

A cost benefit-analysis of the tax credit in 2009 showed that at best a major production like "Public Enemies" netted the taxpayers of Wisconsin $400,000 and it likely had a net negative fiscal impact.

The then-state Department of Commerce found several fundamental flaws in the program:

  • The program’s flaws create an incentive to hire out-of-state contractors instead of Wisconsin labor.
     
  • The program is really expensive because it is a refundable tax credit program, not just a tax credit program.
     
  • The program’s cost-benefit analysis compares poorly to other programs aimed at manufacturing, technology, and agriculture.
     
  • In fact, Commerce can offer much more assistance to a film or video game than a manufacturer, a biotech start-up, or a cheese plant.
     
  • The program is an unlimited liability for Wisconsin.


    And what about "Public Enemies"?

     
  • Only 27% of spending benefitted Wisconsin even though Hollywood received subsidy on 100% of spending.
     
  • The direct benefits rebounding to Wisconsin from Public Enemies were virtually offset by the expense.
     
  • It takes 365 Wisconsin residents, working for 1 year, to generate enough income tax revenue to subsidize 1 Hollywood director who comes to Wisconsin to work for 2 months.
     
  • It takes 266 Wisconsin workers 1 hour each to generate the subsidy that results in 1 hour of Wisconsin labor on a major Hollywood film like Public Enemies.
     
  • At best, the direct return to Wisconsin was +8.4% ($0.4M)…$400,000.


Wisconsin is not the exception to the rule.

The Tax Foundation in Washington D.C. published a major study in 2010:

“In the last decade, state governments have enacted numerous movie production incentives (MPIs), including tax credits for film production. MPIs are popular with state officials and many of their constituents but often escape routine oversight about benefits, costs and activities. Based on fanciful estimates of economic activity and tax revenue, states invest in movie production projects with small returns and take unnecessary risks with taxpayer dollars.

“MPIs fail to live up to their promises to encourage economic growth overall and to raise tax revenue. States claim MPIs create jobs, but the jobs created are mostly temporary positions—often transplanted from other states—with limited options for upward mobility. Furthermore, the competition among states transfers a large portion of potential gains to the movie industry, not to local businesses or state coffers.”

And this is just one of the tax credits Kooyenga would like to see gone.

Kooyenga is right. Let’s reward and relieve the folks that have been footing a huge tax burden for far too long. And that’s definitely not the Hollywood crowd.

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