Just about everyone loves the idea of movies being film in the city of Boston.

Just about everyone …

I like it, actually. I see no problem in doing so, is probably a better way to express my feelings. Sharing a slice of pizza with Jason Biggs and hanging on the set with Annette Bening is fun.

But, something about the whole thing has bugged me. I couldn’t quite figure it out. I knew it had something to do with the new law that was passed by The Commonwealth to encourage filming in our state.

The specifics have for some reason been very hard to understand.

Whenever anyone from the state is asked, or whenever a story appears in the press, it’s always, “The state provides credits to the producers of each movie filmed here.”

For example, from the Globe:

In September, Massachusetts Film Office executive director Nick Paleologos told members of the Massachusetts Production Coalition (online at massprodcoalition.com) that the tax credit that went into effect in January 2006 really is working. There is now a 25 percent credit on all spending that film productions do in the state, and all state taxes on production spending are eliminated.

You see – anytime the word “credit” is used, the word “tax” is used later.

The truth is a bit more complex.

Example #1

Say a film company decides to make a movie in Boston. When they get here, the production crew buys a stuff – lumber and paint, etc. The amounts are in the millions of dollars. The film company pays the state’s 5% sales tax on these items.

Later, when the film company looks at how much money they actually spent in Massachusetts, they tally up all those receipts, and submit them to the state. The state then rebates them the entire 5% sales taxes paid.

Example #2

A film company employs a production crew, support staff, and movie stars while in Boston. Each of these employees may be subject to Massachusetts payroll tax withholding (much like you and I).

Later, when the film company looks as how much money they actually spent in Massachusetts, they tally up those receipts, and submit them to the state. The state then rebates them 25% of the payroll taxes withheld. (I’m not sure who gets this money – the film company or the employees. Could be an important distinction.)

The 25% payroll tax credit is a credit on the tax – not on the salaries, as far as I know. So, if an employee makes $1,000 for a week’s worth of work on The Women, and the payroll tax is 5.25%, or $52.50, the credit would be one-forth of that, or $13.13.

The film company is not able to take any credit on movie star salaries it pays over $1 million. Meaning, no big stars’ salaries are included in the 25% payroll tax credit.

Example #3

A film company employs a production crew, support staff, and movie stars while in Boston. The crew spends money on sets and food and hotels, etc. The film company pays the stars and everyone else a salary.

Later, when the film company looks as how much money they actually spent in Massachusetts, they tally up those receipts, and submit them to the state. The state then rebates them 25% of the money spent.

From the Massachusetts Production Coalition (a private organization):

The 25% Production Expense Credit

Who is eligible:

* Production company that spends at least $50,000 in production costs on a motion picture in MA during a consecutive 12 month period

AND one of the two:

* Production company that spends more than 50% of a motion picture’s total production expenses in MA

OR

* Shoots more than 50% of a motion picture’s principal photography in MA

What the 25% is applied to:

* Massachusetts production expenses
1. Excludes aggregate payroll expenses applied to the payroll credit
2. Includes payroll of “High Salary Employees” not applied in the payroll credit

So what happens is, for every $1 spent in Massachusetts on a film, $0.25 is given back to the film company.

I think that figures out to mean one of two things – the same thing – 1) A film company only ends up spending 75% of what they needed to spend to make the movie; or, 2) A film company ends up being able to afford to spend 125% of what their budget was, to begin with.

The distinction between Example #1 and #2 and Example #3 is, #1 and #2 are tax credit rebates – returning money that went to the state and is being given back, while #3 is basically the state making cash payments, basically spending additional money, dollar-for-dollar.

Putting it a different way, if your typical movie star came into Boston with a million dollars in their pockets, that star is leaving Boston with $1.25 million in their pockets.

That’s about the gist of it, as I understand it.

More: 2007 movie boom enriches state – By Leslie Brokaw, The Boston Globe

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Updated:  1st Q 2018

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