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Film tax credits create good economic ‘action’ in year one

After almost one-year, the tax incentives for the film, television and video game industry in Wisconsin are creating jobs, positive visibility for the state and attracting permanent investment in production infrastructure. In short, the incentives are working. In challenging economic times, this is one of the few bright sectors that has shown growth in Wisconsin.

The tax credits got off to a high-profile start earlier this year when director Michael Mann brought Johnny Depp to Wisconsin to shoot the high-budget film, “Public Enemies.” Not only did the film company spend an estimated $7.5 million in the state, the International Alliance of Theatrical Stage Employees union reported that the shoot created 240 IATSE jobs in Wisconsin with a total payroll of more than $1.7 million.

In addition to this project, an additional $8 million in revenues is expected from smaller independent film and TV projects as well as two Wisconsin-produced video game titles.

Now, as if to “rain on the parade” and thwart this positive momentum, there is buzz afoot in Madison that lawmakers might be asked to modify the incentive legislation by putting an annual “cap” on the amount that could be refunded. This would severely limit our ability to bring significant new jobs and revenue to the state. This would be a mistake.

As passed overwhelmingly by the state Assembly and Senate under the leadership of Lt. Gov. Barbara Lawton and signed into law by Gov. Jim Doyle, the tax incentives do not provide rebates to “above-the-line” budgetary items such as stars (Depp) and directors’ (Mann) salaries. Above-the-line expenditures are those that are negotiated or spent before filming begins. These costs can include rights for the material on which the screenplay is based; and the salaries for the screenwriter, producer, actors and director.

The incentives are aimed at “below-the-line” expenditures. Below-the-line costs include the salaries of nonstarring cast members and the technical crew, as well as use of the film studio and its technical equipment, travel, location and catering costs, etc. In contrast to above-the-line costs, the below-the-line budget is usually fixed.

Lastly, these tax incentives support small businesses and Wisconsin workers, not the big Hollywood studios. According to the last available information from the Motion Picture Association of America, more than 160,000 firms around the country were involved in the industry in 2005, and 85 percent of these firms employed fewer than 10 people. These incentives are an incubator for creating a new economy for Wisconsin and putting our residents to work.

Now is not the time to shutter the program that is creating immediate economic benefits and jobs. Now is the time to let the tax incentives work unimpeded so we can continue to build a new clean, green creative economy for Wisconsin and put more of our residents to work.

Scott Robbe is executive director of Film Wisconsin; e-mail scottrobbe@gmail.com. George Tzougros is president of the Film Wisconsin board; e-mail George.tzougros@arts.wisconsin.state.wi.us.