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Friday, February 17, 2012

Some Tax Loopholes Have It Harder Than Others

Posted by on Fri, Feb 17, 2012 at 6:00 AM

As you may have heard, this cash-strapped state gives away billions annually via tax loopholes—some of them good (because they make your food cheaper), many of them not so good (because do plastic surgeons and private jet owners really need tax breaks?), and many of those not-so-good ones unfortunately lacking an expiration date.

On top of that, and no surprise, the nice and good tax breaks tend to finish last. For example: A relatively small tax break designed to encourage filmmaking in Washington State expired last year because it actually had an expiration date (unlike a lot of the bad tax breaks) and the legislature, facing a never-ending budget shortfall (partly because those bad tax breaks don't have expiration dates) declined to renew it.

This year, SB 5539, which would reinstate the filmmaking tax break—and cost the state about $7 million every two years in rebates to filmmakers (for filmmaking-related economic activity that's estimated to bring in ten times that amount every two years)—made it out of the state senate on a 40-8 vote and is now awaiting its fate in the house.

“I believe it’s very important," said Sen. Jeanne Kohl-Welles (D-36), the bill's prime sponsor. “Vancouver—and British Columbia more broadly—really have the market for film and television production because they offer such incredible tax breaks. Oregon is better than us, too.”

For example, Kohl-Welles said, the Twilight movies that have made Forks, WA famous were actually filmed in B.C. and Oregon. “So, even though we benefit from tourists coming to Forks, we don’t get the filming-related jobs here," Kohl-Welles said. "We don’t get the hotels, and restaurants, and catering, and crew here. We could name film after film after film like that.”

Amy Lillard, executive director of Washington Film Works, which administered the program before it was cut off, and is now overseeing audits and paperwork for rebates filed before the loophole expired, says: “With 40 other states with incentives in place, we need this."

Lillard added: "This is a program that has been vetted by the independent economic body of the legislature, which says it is generating money and is working.”

No rebates are given out, Lillard and Kohl-Welles stressed, until filming is over and movie- or commercial-makers have turned in receipts proving their economic impact. Also, even though an expiration date is what did this loophole in to begin with, the proposed bill to re-start the rebates also includes an expiration date: July of 2017.

Will the re-start bill make it through the house this year?

“I’m not a betting woman," Lillard said, "so I’m not going to comment on that.”

 

Comments (8) RSS

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1
Koll-Welles hasn't seen a subsidy she doesn't like. She needs to get on her bike and ride.
Posted by Freddie Mercury on February 17, 2012 at 6:17 AM
2
This would be a new private jet charter aviation company. Many aviation companies started the charter flights to attract their regular customers. http://www.247jet.com/
Posted by privatejet on February 17, 2012 at 7:17 AM
gloomy gus 3
for filmmaking-related economic activity that's estimated to bring in ten times that amount every two years
Isn't this the appeal made by every tax-break-seeking industry, though? That the multiplier effect guarantees a new tax would drain more money from the state's economy than the tax would bring in? I don't know how true it is or not, but it is the same argument with which oil companies and online booksellers fend off the legislature.

Or is that your point? I'm sorry, it's early.
Posted by gloomy gus on February 17, 2012 at 7:42 AM
4
Oh I get it, you like tax breaks when they're for YOUR constituency, just not for other constituencies that do things like employ tens of thousands of machinists or software engineers. 

Got it. Sure. 

Thanks for the laugh hypocrite.
Posted by Could you be more full of Santorum? on February 17, 2012 at 8:00 AM
Joe Szilagyi 5
Gus, perhaps the free advertising factor plays a role, as well? For example, we just watched Chronicle in the theater. The film is basically a live action post card for Seattle in many instances.
Posted by Joe Szilagyi http://www.joeszilagyi.com on February 17, 2012 at 8:18 AM
Timrrr 6
Didn't someone this season introduce legislation to make ALL tax breaks, current & future subject to expiration or at least regular review & renewal?

How's that one fairing in Olympia right now?
Posted by Timrrr on February 17, 2012 at 9:02 AM
7
It is worth noting that this rebate is voluntarily funded by Washington businesses. It's not a tax-cut; it allows businesses to direct a portion of their B&O tax payment to fund this program. They only receive a 1:1 credit, meaning the businesses pay the same total amount of B&O. Further, the enabling legislation limits the funds so directed to $3.5M a year.

Secondly, in addition to only offering the rebate on money spent in Washington, and only paying the rebate _after_ that money has been spent and the expenses reviewed; the program requires that the projects provide health and retirement benefits to their employees.

Which means in most cases hiring Union crew.

I believe these seemingly small details make this program literally unique among such incentive programs.
Posted by Stephen McCandless on February 17, 2012 at 9:34 AM
COMTE 8
@3:

That's true up to a point, but also bear in mind that a lot of these tax breaks go to businesses that are already IN our State; the Washington FilmWorks Incentives are used, in large part (although not exclusively), to attract out-of-state employers who wouldn't otherwise be spending money here. And they DO spend money, most of which stays in the local economy generating jobs; performers, technicians, support personnel, hospitality, transportation, etc.
Posted by COMTE http://www.chriscomte.com on February 17, 2012 at 11:01 AM

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