On January 1, 2006, the Connecticut General Assembly enacted an aggressive film production tax credit (defined in Sec. 12-217jj of the Connecticut General Statutes) intending to attract a larger segment of the lucrative film industry into the state. The immediate result of this act is transparent, as Connecticut has experienced a dramatic increase in film production since the law’s enactment. The economic ramifications of this act, however, are less straightforward. In granting a tax credit to the film industry, the state effectively reduces the tax revenue it would otherwise receive from increased film production in the state that presumably would not occur without the credit.
The result of this temporary sacrifice of tax revenue is a flurry of direct and indirect economic activity that stimulates Connecticut’s economy, which one hopes more than offsets the direct reduction in tax revenue and its indirect effects. The increase in economic activity provides a wide range of economic benefits including increased output (sales) for local businesses, new jobs, as well as subsequent increases in sales and personal income tax revenue to the state. The purpose of this study is to evaluate the impact of the film production tax credit on Connecticut’s economy.
Contents
EXECUTIVE SUMMARY
INTRODUCTION
BACKGROUND
- The U.S. Film Industry
Connecticut’s Film Industry
The General Structure of Film Production Tax Incentives
Connecticut’s Film Production Tax Credit
FILM PRODUCTION INCENTIVE STUDIES
- Manitoba Province (Canada)
British Colombia Province (Canada)
New York
Louisiana
THE ECONOMIC AND FISCAL IMPACTS OF FILM PRODUCTION IN CONNECTICUT
- Economic Impact Method
ECONOMIC IMPACT RESULTS
CONCLUSION
APPENDIX A: THE REMI MODEL
APPENDIX B: U.S. FILM PRODUCTION INCENTIVES
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