BOSTON (CBS) – The film tax credit has helped turn Massachusetts into a movie making Mecca. The Bay State’s towns and scenic coastline are all over the big screen. But the I-Team found that many companies cashing in on the tax credit have nothing to do with making movies.
Tiffany Kinder is the very person the state’s film tax credit is designed to help. She and her husband are part owners of Red Sky Studios in Brighton. And thanks to the tax credit she says they have a lot of prominent films under their belts.
“We have worked on “RIPD”, “The Heat”, “Knight and Day,” she told the I-Team.
Red Sky Studios has 10 full time employees and they hire about 50 freelancers to work on local shoots and big time Hollywood movies.
“How much of this work dries up if there is no film credit?,” the I-Team asked.
“If there’s no film credit. It’s gone, in its entirety. It’s gone,” Kinder replied.
But the film industry isn’t the only one cashing in.
According to the Department of Revenue 82% of the tax credits are sold to people who don’t work in film at all.
“There’s companies including insurance companies who are looking for ways to offset other tax obligations they have and so one of the ways they offset that tax obligation is purchasing that tax credit,” said State Senator James Eldridge (D-Acton) an opponent of the credit.
The number one buyer is insurance companies, followed by corporations.
Entertainment lawyer Vinca Jarrett has been part of the deals.
“Bank of America, one of the largest in the state actually paying taxes, and they do this all over the country,” she explained about the practice of buying up the credits.
“People at home might say, well why do I want to give Bank of America a tax break?” the I-Team asked.
“Because you want to create jobs here in Massachusetts. That’s why,” Jarret replied.
Here’s how it works. A production company doesn’t usually owe much in Massachusetts taxes. Selling the credit for on average nine cents on the dollar allows them to turn it into cash. And it lets another big business save on its taxes.
It’s just one area opponents of the credit are honing in on as they fight with film industry locals over who this credit really benefits.
“That means that tax credit is benefiting insurance companies across the country,” says Senator Eldridge.
But for Kinder at Red Sky Studios, the benefits are seen on a smaller scale.
“There are hundreds of people working behind the scenes working 12-16 hour days just trying to make a living and support their families,” Kinder said.
The Baker Administration wants to eliminate the film tax credit. It’s one of the first things they targeted. Instead, they say, they could use the money to fund a larger tax credit for lower income families.