Generous tax breaks cause outcry

The Michigan Legislature is looking to add another layer of transparency to the state’s tax incentive program.

The most generous program in the country — refunding as much as 42% of all Michigan taxes to qualifying productions — is facing renewed scrutiny from local lawmakers as the state grapples with a $1.2 billion budget deficit. Concerns about the management of the program led to the resignation of the state’s film commissioner, Janet Lockwood, last month.

The bill that passed a key committee in the state House of Representatives on Wednesday would remove a clause from the program’s application that allows a production to have all its relevant financials exempted from the state’s Freedom of Information Act laws. The proposal passed a state Senate committee in December.

The bills would also require the Film Office to supply a tally of Michigan residents hired as a result of production, along with dollar figures indicating exactly how much a production paid in taxes and how much it got back in credits. The amount of the credit would be posted on the Film Office’s website.

Questions have also been raised about the Film Office’s ability to ferret out fraud in the applications for production rebates. The state’s attorney general is investigating at least one case in which an applicant is suspected of inflating the value of its production facility in order to receive the state’s 25% studio-building rebate.

A number of states allow productions to request exemptions from Freedom of Information Act requests in order to keep their finances secret. But there’s been a strong call in Michigan for more disclosure given the amount of tax credits involved.

“It’s not just the general public who can’t get the information — the lawmakers who are overseeing the program can’t get it,” said Rich Perlberg, general manager and exec editor of the Livingston County Daily Press & Argus, who testified before the Michigan House committee Wednesday. “It’s potentially a five-year prison sentence if the Film Office releases it. We’re not asking to see Clint Eastwood’s W-2, we just want to know how much money goes to in-state interests and how much leaves the state.”

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