Repeal the film tax credit, but don't expect savings just yet
Even if this wasteful program is killed in 2018, its expenditures will continue for years
To the editor:
In response to “Tax credit repeal bill puts local film industry on edge”:
The Citizens Budget Commission is a long-time critic of the New York state Film Tax Credit program and supports its repeal. However, due to some unusual provisions of state tax law, repeal of the credit will not yield immediate state savings.
Because the credit has a rollover provision, the $420 million annual cap is somewhat superfluous and does not actually limit the amount of credits that can be allocated in a particular year. Once the $420 million cap has been met, the state awards credits from future years' allocations and companies are then required to wait to claim their tax credits.
The state already gave away all of the 2018 allocation in April of 2017 when the budget was passed, and may have given all of the 2019 allocation as well. Also, the credit requires companies claiming credits in excess of $5 million to spread that claim over three years. Therefore, if a movie is awarded a $6 million credit in 2017 from the 2019 allocation, its maker would still be receiving subsidies from state taxpayers in 2022, when the company files its 2021 taxes to claim the final third of their credit.
Assuming the state will not rescind already promised credits, its budget won’t realize full financial benefits from repealing the film tax credit for at least four years, making the timely repeal of this wasteful credit even more imperative.
David J. Friedfel
Director of State Studies
Citizens Budget Commission
Original letter to the editor of Crain's New York Business can be found here.