Impact of Michigan’s Film Incentives Under Debate

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Six out of seven economists have a negative evaluation of Michigan’s film tax incentive program and believe it is not a good use of state funds to grow the state’s economy, says a new report by Oakland University’s School of Business Administration.

In the just released Southeastern Michigan Economic Outlook Policy Forum, participants were asked whether they agreed or disagreed with the following statement: “The Michigan film incentive program that will provide $35 million to the producers of the Superman-Batman movie (filming in Detroit early this year) is a worthwhile use of state funds to generate jobs and income in Michigan.”

While the majority of the forum’s economic experts disagreed on the use of the incentive, more than half (52 percent) of consumers and 42 percent of business executives believe the tax incentives are a good idea.

The feature film was awarded an incentive in August based on $131 million of projected in-state expenditures. At the time of the announcement, the production was expected to hire about 400 Michigan workers (the equivalent of 426 full-time jobs), plus an additional 6,000 man/days of extra work.

It’s likely the experts polled considered the statement relative to the alternative, says Jonathan Silberman, professor of economics at Oakland University in Rochester Hills.

“You have this incentive, but you also have to think, ‘If I’m not spending the money on film incentives, where could I be spending the money and would that be more effective?’” Silberman says. “So this is considering the full ramifications and the alternatives, which economists refer to as ‘opportunity cost.’ I don’t think the consumers are thinking about that.”

In the report, the economists polled said Michigan should invest its funds in long-term growth, not short-term subsidies to specific industries. Silberman says examples of such investment include education, infrastructure, and “things that increase productivity.”

To read the full report, visit oakland.edu/business/economic-outlook.

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