Michigan film incentives: The Sequel! Lawmakers propose new tax credit

•  Pending legislation would offer filmmakers up to 30 percent tax credits for filming in Michigan, hiring Michigan workers
• Backers say the revamped plan is based off successful programs in other states, would encourage new investment in Michigan
• Critics say any economic benefit from more movies in the state won’t be worth the lost revenue

A group of Michigan lawmakers are hoping to roll out the red carpet for more film, television and commercial projects by once again offering incentives to producers who work in the state. 

House and Senate legislation introduced this summer would create a transferable tax credit for Michigan-based multimedia projects, ranging from traditional film and television productions to other work, such as commercials, corporate media and music videos.

Eligible companies could get back 25 percent of total spending in tax credits for filming in Michigan and up to 30 percent if the project incorporates the Pure Michigan logo and other Michigan film industry affiliates, capped depending on the length and duration of the project. 

A separate credit would offer 30 percent of total spending for hiring Michigan residents or 20 percent for hiring nonresidents. 

If a company obtained credits but doesn’t have a Michigan tax liability, the legislation as proposed would allow those credits to be sold to a Michigan-based business.

It wouldn’t be the first time Michigan officials have attempted to lure film productions to the state with incentives. Michigan began offering incentives in 2008, and attracted large-scale projects such as “Transformers” and “Batman v. Superman” to in-state filming locations. 

But the film incentive program offering rebates of up to 42 percent of filmmakers’ in-state production costs was shuttered in 2015 during the Rick Snyder administration amid criticism that the return on investment for Michigan taxpayers was minimal. 

Supporters of the new plan argue that this version is a “complete 180” from incentives Michigan offered in the past, crafted after extensive research into other states’ programs with the intent of keeping the money in Michigan. 

“There's no money drawn from a fund, there's no checks cut, there's no budget line items, we're not financing or bailing out movie studios,” said Sen. Dayna Polehanki, D-Livonia, the main sponsor of the Senate legislation. “The credit goes directly back into the Michigan economy.” 

As of 2022, at least 35 states offered tax incentives for film production, according to the National Conference of State Legislatures. Many companies simply won’t work in states without an incentive option, said Alexander Page, legislative chair of the Michigan Film Industry Association. 

“We're totally being left on the sidelines,” Page said.

Page and other industry advocates see the legislation as a job creation opportunity and a boon for a slew of local businesses working with production companies in filming locations, noting one film production on average involves about 60 local vendors. 

To obtain the credit, companies would need to keep, among other things, records of the number of in-state workers hired for the project, any outside vendors involved and spending receipts, as well as spend at least $50,000 for shorter projects and at least $300,000 for feature film productions.  

Under the legislation, the program would end 10 years after implementation unless lawmakers gave the go-ahead for it to continue.

Lawmakers haven’t yet held a hearing on the bills, but opposition is already emerging. Senate Minority Leader Aric Nesbitt, R-Lawton, in a social media post, likened the legislation to a Hollywood handout. 

James Hohman, director of fiscal policy for the free-market Mackinac Center for Public Policy, said he doesn’t see much of a difference from what Michigan incentives offered companies before — save for the ability to transfer credits, a development he had concerns with. 

“We shouldn't be laundering film subsidies through other people's tax returns — this is kind of worse for both film producers and for taxpayer transparency,” he said. 

Hohman said lawmakers should look to the past before considering film incentives again, arguing that paying filmmakers to make movies in Michigan didn’t provide lasting economic benefits. “We spent a half a billion dollars without getting a lasting or sustainable film industry,” he said. 

Michigan screenwriter, author and former production executive Christopher Cosmos argued film incentives are a bipartisan issue, noting that states across the political spectrum have implemented similar programs. 

“There are so many people and young people, especially, who don't want to leave this state, so many with ties who want to move back,” he said Wednesday. “If we don't pass anything, we risk falling even further behind our peers and bleeding and losing even more ridiculously talented people who would love to be living and working here."

Rep. John Roth, an Interlochen Republican and a lead sponsor on the House version of film incentive bills, said he understands the concern about reintroducing incentives. 

But he sees a robust film program as a way to keep young creatives in Michigan — including his daughter, who is currently studying film production in Michigan and is planning to leave for work opportunities elsewhere when she finishes her degree at Grand Valley State University. 

“I think it's kind of silly if we're teaching these courses in our universities that we don't have any jobs for them,” Roth said. “I think we could actually have an industry. But we have to incentivize to begin with to get people interested.”