Film industry tax credits on chopping block?

The Detroit Free Press reports that some in the Michigan legislature are taking a look at the possibility of reducing or even eliminating the enormous tax breaks passed for those who make movies in this state. Those tax breaks cover up to 42 percent of the cost of making a movie and critics say such benefits pay mostly for short-term, temporary jobs that go away once filming has ended.

The temporary nature of those jobs could become more long-term with the establishment of permanent film studios and production facilities in the state, but the article notes that three planned studios in the Detroit area have been delayed or put on hold due to an uncertain economic environment and tight credit markets.

But the film tax credits are really just one small part of a massive array of tax breaks in the state. The ability to give tax breaks has become the primary tool for the legislature to encourage investment in the state, but those tax breaks simultaneously undermine the state’s revenue base at a time when the state government is being starved for resources.

As Eartha Melzer noted a few weeks ago, the state gives tax breaks for everything from Nascar races to church construction. Perhaps most astonishing of all, the state actually gives tax breaks to power companies for the installation of pollution-abating equipment that they are required by law to use.

The upshot of all this: The state government actually gives away $6.3 billion more in tax breaks to companies than it receives in business taxes every year.