Proposed pre-Broadway production tax credit a no no by Marjorie Arons Barron

The entry below is being cross posted from Marjorie Arons-Barron’s own blog.

I can remember the day when many, if not most, major Broadway shows opened in Boston for a test run.  West Side Story and South Pacific are just two that spring immediately to mind. (Others opened in Philadelphia or Hartford.) Now some legislators want to offer $3 million in tax credits for plays and musicals that come here before Broadway or national tour, and it seems like a really dumb idea.

We’ve been providing special tax credits for film producers to shoot here, and the strategy doesn’t stand up to scrutiny. Mass. Inc’s Commonwealth Magazine says  the film tax credit “is all cloak and dagger. Movie producers come to Massachusetts, shoot their films, and receive tax credits equal to 25 percent of whatever they spend. There is no application process, no job-creation requirements, and no disclosure of who is receiving what.”

According to the magazine,  ”the state issued $165 million in film tax credits over the previous three years, which attracted $676 million in spending and generated the equivalent of 3,177 full-time jobs. Only 1,876 people worked directly on films, and they were paid a total of $429 million. Massachusetts residents held roughly 40 percent of the jobs but received only 18 percent of the wages. Nonresidents pocketed the bulk of the money, with $177 million going to just 37 out-of-state actors, directors, and producers.”

As Boston Globe columnist Jeff Jacoby analyzed the figures, the film credit in 2010 generated five cents of net revenue for every buck in credits. (In 2009, it was 12 cents for each dollar in subsidies.)    The handful of jobs created, he said, cost taxpayers more than $142,000 apiece.

Worse, the film producers can decide not to use the tax credits themselves and sell them off to make money. Some producers have been caught claiming fraudulent expenditures. Before they clean up the film credit mess, they want to do the same thing for pre-Broadway productions?  That’s nuts!  At least some life science incentives stipulate specific numbers of jobs to be created.

During the era when many Broadway shows opened here, we lacked a healthy local theatre scene.  Nowadays theatre thrives, what with the Huntington, American Repertory Theatre, Merrimack Theatre, the Speak Easy Stage, New Rep, Lyric Stage and more. If pre-Broadway shows want to open in Boston, the more the merrier.  But they should do so in the open marketplace, because they know Boston audiences are discriminating and love theatre.

Optimally the state should review all our tax incentives, from energy to film to life sciences, to see if we’re getting bang for the buck. If we’re not, given the constraints of state budgeting, the credits should be dumped.  In the meantime,  the legislature should turn thumbs down to the additional $3 million in pre-Broadway tax credits proposed.

I welcome your comments in the section below.