Film Tax Credits In Wisconsin May Be Axed

Mike Godfrey, for LawAndTax-News.com, Washington

23 April 2009

Wisconsin offered a big tax credit incentive to filmmakers - up to 25% of what productions spend in the state. However, now the very incentive that attracted film producers to go there is under threat.

When he signed the tax credits into law, Governor Jim Doyle called filmmaking "part of manufacturing in the twenty-first century." The incentives created more than 750 Wisconsin jobs last year and prompted millions of dollars of infrastructure investment across the state, according to Film Wisconsin, an industry group wishing to keep the program. In its first 14 months, Wisconsin attracted eight feature films, 16 television shows, three national TV commercial productions and two video game productions. Now Doyle says a huge budget shortfall means the incentives are not affordable and he has proposed replacing them with a USD500,000 per year grant program targeted at creating permanent film industry jobs in Wisconsin.

The State Department of Commerce released a report detailing drawbacks in the film tax credit program which include an unfair advantage to out-of-state labour - most of the credits are refundable, creating temporary rather than permanent jobs, disproportionate to tax incentives offered to other industries, and with no limits. The report stated that USD5m was spent in Wisconsin on the production of "Public Enemies," and that USD4.6m in tax incentives was paid out.

Now a debate is raging as to whether or not to save the program in amended form. State Representative Tamara Grigsby (D-Milwaukee) has gained some support for her proposals to close the 'nonresident loophole' regarding production expenditures, adding incentives for hiring Wisconsin workers, adding a "no millionaires clause" to ensure no worker being paid USD1m or more is eligible for credits, and placing a USD15m per-project cap on the amount of credits allocated per production.

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