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Old 02-05-2011, 05:46 PM
 
Location: Exit 242
736 posts, read 912,378 times
Reputation: 573
Quote:
Originally Posted by dstarstories View Post
Ok, so I'm a filmmaker who has actually spoken to many offices in NM about the film incentive program. Although no expert, I do think this makes me a potential client of the incentive program -- not just a reader of headlines -- and therefore I will relate my understanding. This may be old news to many, but I still think it's needed...

NM will reimburse $.25 to a production for every $1.00 spent in the state of NM on services and products. The incentive program does not reimburse for any products or services purchased outside of NM and does not reimburse based upon the entire production budget of a production -- unless 100% of the production budget is spent within NM (and can be proven). With all reimbursement requests a full accounting has to be made proving that each dollar under consideration -- claimed to have been spent in NM -- was indeed spent in NM.

With that in process in mind, the NM economy is making profit of a ratio 3:1.

Whether the incentive program is being implemented as written -- or whether NM has the tax money to pay $.25 on each dollar spent in NM (since this program is a reimbursement, there seems a problem if the monies don't exist in state coffers) -- is another issue, but as written this incentive program shouldn't be a tax burden to the people of NM. Why? It only pays out after the state has made 3x the monies taken in; in those terms it is not a tax -- monies gathered for a potential purpose -- as much as a reimbursement of monies already spent in the state. If there is a lack of money for paying these incentives, I think it best to see where those monies were used...?

A state with a rapidly growing tax base -- population -- and a growing number of films shooting in-state, shouldn't be having issues... unless they are heavily leveraged elsewhere and haven't allocated any monies to potential films shooting in NM? But then this goes right along with other lack of foresight in infrastructure-building.
dstarstories, you raise a critical point against the 25% subsidy - NM doesn't have the money. We're in the midst of $400-500 million budget shortfall. I hope you're not suggesting that state taxes should be raised to continue the subsidy.

There are no credible studies demonstrating that thee are net gains to the state from the subsidy. Also, there are no caps on the subsidy. Last year we gave film makers $66 million. We simply can't afford that again.
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Old 02-05-2011, 07:32 PM
 
1,278 posts, read 2,185,261 times
Reputation: 1472
Quote:
Originally Posted by jiminnm View Post
Since all of my income (and, therefore, all of my expenditures in NM) comes from pensions and other retirement income produced from investments outside the NM economy, am I entitled to a rebate? Show me the money !!!
Why not make a movie and find out.
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Old 02-05-2011, 08:53 PM
 
Location: Abu Al-Qurq
2,802 posts, read 4,175,801 times
Reputation: 1626
Quote:
Originally Posted by mortimer View Post
I explained that in order for the film people to
be able to buy houses, someone else has to have tax money taken away
from them and thus will not be buying a house.
This assumes that the house fraction per dollar is the same from taxpayer to beneficiary, when in fact, one fat cat taxpayer may help 10 subsidy beneficiaries each afford their own house.

Quote:
Originally Posted by yukon View Post
seems Richard Gere flew in to NM for something - chartered plane was $100,000. State of NM had to pony up $25,000 of that cost. What local job did that support, hmmn?
Navajo refinery makes the jet fuel that that plane used when it gassed up, out of NM-derived oil. A local airport-based firm may have needed to perform maintenance on the plane.. I'd say between all of those, at least part of a local job was justified.

Quote:
Originally Posted by mortimer View Post
If you want businesses to locate here, streamline regulation, improve the schools,
maintain the infrastructure and keep taxes low and they will come on their own.
There isn't any need for corporate welfare.

Going after "trophy" companies doesn't work. It only serves to harm home-grown firms.
For every company that the state bribes so that it promises to employ 100 people, there
are more than 100 people that are either quietly laid off or are simply not hired by an
existing business - like a shop in Nob Hill, like a small manufacturer in the valley, etc.
I'm in the process of starting a factory and I can tell you that subsidies are a very important consideration in where it will be set up. Businesses will locate where it makes the most sense for them to locate. Take away my subsidy in state A, I'll set up and hire people in state B (probably much of them the same people, but now they'll be paying income taxes and helping drive the economy in state B).

If you want to stimulate job growth and improve overall tax revenues, getting a business that pays above-median wages (High-techco) is worth more in subsidies than below-median wages (Walmart).

Movie jobs are above-median, last I checked. Hence, they're a better subsidy than, say, bean-farming jobs.

You have to look at incentives a bit like a young woman considering premarital relations; it's a bit of a prisoner's dilemma. If nobody else offered subsidies, they'd be unnecessary, but since other states (other women) are offering the subsidies, those subsidies become the cost of doing business, and in order to get the tax revenue, you have to play the game.

What most people don't seem to get is that if your state is facing a $XX million shortfall, and you can close that shortfall by offering an unfair subsidy (tax breaks for above-median-paying employers that create tax revenues and wouldn't otherwise set up shop), then it necessitates lower taxes overall. If incentivizing movies lowers my tax burden by $10 a year, then I'd say it's fair enough for me.

Perhaps someone can explain to me why me paying more taxes as an average Joe taxpayer is fairer?
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Old 02-06-2011, 03:50 PM
 
Location: Albuquerque
342 posts, read 403,437 times
Reputation: 223
Quote:
Originally Posted by Zoidberg View Post
You have to look at incentives a bit like a young woman considering premarital relations; it's a bit of a prisoner's dilemma. If nobody else offered subsidies, they'd be unnecessary, but since other states (other women) are offering the subsidies, those subsidies become the cost of doing business, and in order to get the tax revenue, you have to play the game.
That is the problem. Of course one way to not play the game is set a low tax burden for everyone rather than trying to gamble on which industries to subsidize.

Quote:
Originally Posted by Zoidberg View Post
What most people don't seem to get is that if your state is facing a $XX million shortfall, and you can close that shortfall by offering an unfair subsidy (tax breaks for above-median-paying employers that create tax revenues and wouldn't otherwise set up shop), then it necessitates lower taxes overall. If incentivizing movies lowers my tax burden by $10 a year, then I'd say it's fair enough for me.

Perhaps someone can explain to me why me paying more taxes as an average Joe taxpayer is fairer?
You are making an assumption that the subsidies are increasing tax revenue. You are also assuming that the money spent on competing for Hollywood's business is the best use of that money for reducing (or more than likely increasing) your tax bill.
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Old 02-06-2011, 07:40 PM
 
Location: Albuquerque, NM
1,444 posts, read 2,955,455 times
Reputation: 517
Quote:
Originally Posted by dstarstories View Post
Ok, so I'm a filmmaker who has actually spoken to many offices in NM about the film incentive program.
Already biased information. Immanuel Kant would be quite ashamed of you!
Quote:
Although no expert, I do think this makes me a potential client of the incentive program -- not just a reader of headlines -- and therefore I will relate my understanding. This may be old news to many, but I still think it's needed...

NM will reimburse $.25 to a production for every $1.00 spent in the state of NM on services and products. The incentive program does not reimburse for any products or services purchased outside of NM and does not reimburse based upon the entire production budget of a production -- unless 100% of the production budget is spent within NM (and can be proven). With all reimbursement requests a full accounting has to be made proving that each dollar under consideration -- claimed to have been spent in NM -- was indeed spent in NM.

With that in process in mind, the NM economy is making profit of a ratio 3:1.

And here is where it is clear you do not know what you are talking about. Money spent in the state is neither profit nor tax revenue.

If I spend $1000 on a TV, and the state reimuburses $250, they don't make $750. Rather the net gain, or loss, is something like $-250+(sales tax off of $1000)+ (tax on biz selling said TV). While I am not going to extrapolate on how much tax revenue is made off of the TV, I guarantee it is less than the $250. So no, the state would not have a profit margin of 3:1.

The argument would, by incentivizing TV spending, more people will buy TVs, more people will sell TVs, and more people selling TVs will be employed. To see if there is any economic benefit would require a very in-depth study. Basic supply and demand suggests that the supplier is selling at one price at a certain market supply equilibrium, but the buyer is buying at 25% less price, with quantity demanded at a different equilibrium than the original price. Essentially the market is being artificially boosted, except that 25% subsidy is coming from the tax payer. Essentially there is a transfer payment from your wallet and my wallet, to the wallet of the "crony" industry (Film for the state, TV and Electronic buyers/sellers in my specific example).

There is essentially NO guarantee that the state makes any money, or even breaks even, off of this subsidy. There has also been no reliable study. This isn't a political argument. There should be no argument or discussion involved. A comprehensive study must be done to weigh the benefits and costs.
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Old 02-06-2011, 08:03 PM
 
1,973 posts, read 2,724,409 times
Reputation: 782
Default Film Subsidy in Massachusetts

"A newly released state Department of Revenue study found that in 2009, when The Fighter
was being made, Massachusetts paid out $82.4 million in tax credits to movie and TV production
companies. Nearly a quarter -- 24.8 percent -- was paid to actors and actresses who were
making over $1 million a year. The study found just 222 net new Massachusetts-based jobs
were created -- at a cost to taxpayers of $324,838 per job -- and that for every $1 in tax
credits state taxpayers paid out to moviemakers, the state reaped just 13 cents in net new tax
revenue attributable to economic activity generated by the productions."

Of course, New Mexico's well regarded governmental efficiency allows us to achieve 10 times
the return that slovenly Massachusetts does, right? After all, Ernst&Young has said so...



Cost of film industry to Massachusetts

Says it all...
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Old 02-07-2011, 07:36 AM
 
Location: Abu Al-Qurq
2,802 posts, read 4,175,801 times
Reputation: 1626
Quote:
Originally Posted by ralthor View Post
That is the problem. Of course one way to not play the game is set a low tax burden for everyone rather than trying to gamble on which industries to subsidize.
After extensively researching tax burdens vs. subsidies, I've come to the conclusion you can't set the tax burdens alone low enough to compete with the subsidies certain states are offering in certain industries. In principle, I think we can all agree those are not industries worth competing in, but those industries are also the sexy/trophy industries that get politicians reelected (moviemaking, renewable energy in all shapes and forms, growing corn, automaking, etc.).

Quote:
You are making an assumption that the subsidies are increasing tax revenue.
That's what my arguments indicate, though I'm not sure I'm decided one way or another; local multiplier effects are very hard to quantify but they're also very bad to ignore.

Quote:
You are also assuming that the money spent on competing for Hollywood's business is the best use of that money for reducing (or more than likely increasing) your tax bill.
Forgetting the parantheticals for a moment, "use of that money" and reducing my tax bill are mutually exclusive. Net money is created if my tax bill is reduced, so there's no "best use" for money that net comes in (other than reducing tax burdens).
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Old 02-07-2011, 07:45 AM
 
Location: Abu Al-Qurq
2,802 posts, read 4,175,801 times
Reputation: 1626
Quote:
Originally Posted by Mike Horrell View Post
Of course, New Mexico's well regarded governmental efficiency allows us to achieve 10 times
the return that slovenly Massachusetts does, right? After all, Ernst&Young has said so...



Cost of film industry to Massachusetts

Says it all...
Reading the responses to that article, those Massachusetts job numbers are in dispute (oddly enough also confirmed by Ernst & Young), most primarily because the response alleged that the number of jobs created was reduced by the number of state government jobs lost over the same period.

Either the governmental bureau in Mass/organization at NMSU or Ernst & Young are full of it (or I suppose both is possible).

"There are lies, damned lies, and statistics."
-Mark Twain
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Old 02-07-2011, 08:28 AM
 
1,973 posts, read 2,724,409 times
Reputation: 782
Quote:
Originally Posted by Zoidberg View Post
Either the governmental bureau in Mass/organization at NMSU or Ernst & Young are full of it (or I suppose both is possible).

"There are lies, damned lies, and statistics."
-Mark Twain
Now you're starting to dial in....
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Old 02-07-2011, 09:33 AM
 
Location: Bernalillo, NM
697 posts, read 782,872 times
Reputation: 846
Quote:
Originally Posted by aries63 View Post
Utah is poised to take away some of New Mexico's film business...New Mexico may not have to change its program at all and would still lose business since other states besides Utah are jockeying to offer even better incentives.
In a totally rational world, where the politicians truly acknowledge the deep economic hole the entire country is currently in, all the states would get together and eliminate all such film industry subsidies. I wonder just how much public monies this would "save" nationwide if every state agreed to end the current race to the bottom ...?

Of course it's a pipe dream to think that politicians can think rationally or all the states can agree on anything...
Quote:
Originally Posted by alloo66 View Post
Let's end all subsidies rebates for every industry and level the playing field so that business don't want to do business in New Mexico.
If the only reason they're doing business here is because we're paying them to do so the long-term prospects of keeping them are doomed anyway. Sorta like paying a hooker and expecting to find true love. They'll be gone as soon as the money runs out.

If you're going to have any subsidies it should be IMO for industries that would produce products or services that yield direct tangible benefits for at least a significant fraction of NM residents. For example, lower energy costs and greater supplies would be at the top of my list cuz that would benefit all of us. Film industry subsidies wouldn't be anywhere near the top of my list.
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