Opinion: Illinois film credit is a win-win program

SHARE Opinion: Illinois film credit is a win-win program
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In this July 27, 2011 file photo, actor Kelsey Grammer acts during a scene while filming “Boss” in Chicago. The state of Illinois has granted $204 million in tax breaks to more than 930 movies, TV shows and commercials filmed in the state from July 2008 to December 2014 — productions like the TV show “Chicago Fire” and the movie “Transformers 4,” according to state records. (AP Photo/M. Spencer Green, File)

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It’s been reported recently that from July 2008 to December 2014, $2.8 billion was spent here by TV series, movies and TV commercial productions on wages to Illinois residents, and goods and services provided by Illinois businesses. As a result, $204 million in tax credits were awarded under the Illinois Film Production Services Tax Credit Program. So far, so good, but the tax credits were described as a gift to Hollywood, and the statement made that the taxpayers of Illinois stand to lose the $204 million. Nothing could be further from the truth.

OPINION

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It’s absolutely valid that every business incentive should be judged on the basis of its cost vs. benefit. In this case, that means determining the amount of state tax revenues generated by $2.8 billion in film production expenditures, and comparing it with $204 million in state tax credits that have been awarded. The Screen Actors Guild commissioned exactly that type of study in Chicago in 1997 and although that’s a long time ago, the types of expenditures, and ratio of wages to non-wage expenditures haven’t changed. So it’s still valid to use it as a basis to arrive at a close ballpark estimate of how much of the $204 million in tax credits Illinois has already recouped.

The result is astounding — $2.8 billion, coupled with $4.7 billion in indirect economic activity generated by it, produced a whopping $438 million in state, county and city taxes. The SAG study broke out city tax revenues (it’s intended use was to demonstrate how much the industry puts in Chicago’s tax coffers), but state and county tax revenues were combined. Using the same approach, the city’s share is $145 million, and the combined state and county portion is $293 million. County taxes are a relative sliver compared to the state, but for the sake of a ballpark, let’s round off the state’s share to an even $250 million.

So, $204 million in Illinois tax credits have resulted in $250 million in Illinois tax revenues. So much for the program costing the taxpayers a penny, much less being a bad deal for Illinois. To date, it’s added to the state’s tax coffers rather than depleting them.

The Illinois film tax credit program has put thousands of Illinois residents to work and pumped billions into our local economy. It’s benefitted existing support companies, while at the same time motivating out-of-state companies to open here and strengthen our infrastructure. It’s done this without resorting to the huge costs that some states have incurred by making eligible the salaries of non-residents (including millions paid to stars and directors) and in fact, it’s been revenue positive, not negative. It’s encouraged diversity in our work force, and has had the added benefit of boosting tourism — which is tough to measure, but still true.

I believe that perfectly fits the definition of a “win-win” situation.

Wayne Kubacki is an board member of the Illinois Production Alliance.

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