Report: CT should consider eliminating costly film tax credit

Back • Publication Date: April 4, 2024 • Fiscal & Economics

Thursday, April 4, 2024

new report found Connecticut might be better off without its film industry tax credit.

The Connecticut Voices for Children report showed the film industry tax credit costs the state more than $60 million dollars a year, which means between 2007 and 2023, the state lost around $900 million.

Patrick O’Brien, research and policy director at Connecticut Voices for Children and author of the report, said it plays into the state’s regressive tax system because it is not targeted to low and middle-income families.

“If you’re spending about $106 million a year in these film industry tax credits moving forward, only a portion of that is going to ultimately be passed to low and middle-income families within Connecticut,” O’Brien pointed out. “A substantial portion of it is likely to be exported out of state entirely.”

O’Brien’s research does not examine whether the tax credit is worth salvaging but suggested eliminating it would help the state recover the revenue beginning next year. The General Assembly has been weighing legislation to end the tax credit. Though the bill met staunch opposition at a public hearing from people who believe it is good for the state, it has garnered support from Rep. Jason Rojas, D-East Hartford, the House majority leader. The bill awaits committee action.

What would the state do with the money? One suggestion is to put it toward funding a state child tax credit. Many organizations have been calling on lawmakers to establish one. O’Brien noted doing so can economically benefit families and the state.

“Because a state-level child tax credit is so well-targeted, it means that it’s going to go entirely to low and middle-income families within the state,” O’Brien emphasized. “We know the main driver of economic growth is essentially consumer spending.”

It is estimated more than $41 million of the almost $106 million on the film industry tax credits for 2025 could provide support for the bottom 92% of Connecticut households. The report suggested several ways to accomplish it, though using this pot of funding alone might not help as many people as the proposed $600 expanded child tax credit would.

Disclosure: Connecticut Voices for Children contributes to our fund for reporting on Budget Policy & Priorities, Children’s Issues, Education, and Juvenile Justice. If you would like to help support news in the public interest, click here.
Authors: Edwin J. Viera •  Source: PNS • View