By MICHAEL LaFAIVE
It is no secret that Mackinac Center scholars have been fierce critics of the Michigan Film Incentive. We are not the only ones. Several Michigan legislators, Lansing budget analysts and scholars have also spoken out against the program as being ineffective and too expensive.
The Michigan Film Incentive is a state economic development program whereby state government offers large tax credits and outright cash subsidies to filmmakers who make some portion of their films here. The program rebates up to 42 percent of a filmmaker’s Michigan expenses. The amount that exceeds the filmmaker’s state business tax liability is reimbursed by a check from the Treasury and signed by John Q. Taxpayer.
Because the state faces another large budget deficit, there is serious talk about reducing or eliminating the $100 million-plus boondoggle. Knowing from the start that their program is vulnerable to economic realities (not to mention political ones and common sense), film incentive officials should have been relatively sensitive about avoiding whiffs of impropriety.
So it is baffling to see the state offer Michigan filmmaker Michael Moore a refundable tax credit for his documentary “Capitalism: A Love Story.” This subsidy should be rejected by Moore on principle alone.
Moore isn’t just any filmmaker. He is a current member of the Michigan Film Office Advisory Council, a state organ created to advise the Michigan Film Office, which is responsible for approving applications for Michigan’s film incentive program. I do not believe it strains credulity to suggest that Moore’s very presence on the council may have led to the film office approving special tax treatment for his work.
Giving an advisory council member’s project tax credits makes this government “jobs” program look like a good ole’ boys network where “la familia” takes care of its own – and with taxpayer dollars. This is not the only instance of high-ranking state officials appearing to benefit directly from the state program in which they play (or played) a role.
Recently, Michigan Film Office Director Janet Lockwood was given a role in a movie — “Wild Michigan” — that had been approved by her office for subsidies. Lockwood blithely dismissed conflict of interest questions from my colleague, Kathy Hoekstra, by arguing that the she had not been paid. But as an actress she was in fact paid; paid with the opportunity to appear on the Silver Screen – an honor for which many actors would themselves pay.
Former state Rep. Bill Huizenga (now a congressional candidate) helped shepherd the Michigan film incentive program to passage in the Legislature. He did so while sitting on the Board of Compass Film Academy, a Grand Rapids-based film school. Lockwood called Huizenga — who was apparently given the moniker “Hollywood Huizenga” for helping muscle the film incentive through the Legislature — “our hero.”
But there is nothing heroic about public “servants” appearing to embrace government programs for the public good, only to discover what appear to be private conflicts of interest. This could be called crony capitalism or corporatism — both pejoratives — that describe commercial successes that are dependent on close interpersonal relationships between government officials and the private sector.
Moore’s acceptance of the Michigan film incentive subsidy is troubling because he has grown wealthy railing against corporations and capitalist institutions — such as Wall Street — for enriching themselves at the expense of the little guy and taxpayers.
In the trailer for “Capitalism: A Love Story,” Moore shows up on Wall Street and says, “…we’re here to get the money back for the American people…” This is in reference to the high-profile bailout of big banks (and other institutions) by the federal government. By accepting a state subsidy, Moore, who shows disdain for private, for-profit businesses raiding the pocketbooks of Americans, engages in this very practice himself.
Even more galling is that Moore is set to feed on Michigan’s beleaguered taxpayers. The Great Lake State has had the highest unemployment rate in the nation for 46 months and currently stands at 14.6 percent. As measured by state Gross Domestic Product Michigan has experienced a lost decade of economic growth. Worse, our per-capita personal income rank among the states has plummeted from 23rd to 37th since 2003. Not since the Great Depression years have the incomes of Michigan residents been so comparatively low. We are becoming a poorer state with each passing year.
Lastly, it is very unlikely that this program is actually effective in creating jobs anyway — which is its purported purpose. As I detailed in a previous Policy Brief titled “Special Effects: Flawed Report on Film Incentives Provides Distorted Lens,” such government jobs programs frequently fail to create jobs. One reason is because robbing Peter to pay Paul does not enrich both Peter and Paul. Michigan hiked taxes $1.4 billion just months before creating the film program to redistribute a portion of it to lucky filmmakers. At best, this creates a jobs wash, not new economic growth.
It is against this backdrop that Moore — with his every-man theatrics — asks the taxpayers of Michigan to subsidize his work and by extension his life. He should not. Doing so just smells like a conflict of interest and it makes this award-winning filmmaker appear hypocritical and insensitive to the plight of Michigan’s taxpayers.
(Michael LaFaive is director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a research and educational institute based in Midland.)