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Michigan State University study finds Michigan's movie tax credits a Big-Time Hit


A Michigan State University study has found that the state of Michigan’s law providing tax credits for film production companies that shoot their movies in Michigan is a big-time hit.

The study, conducted by MSU’s Center for Economic Analysis, found that in 2008, 32 film productions were completed, generating more than $65 million in spending and creating more than 2,700 jobs. And this was just in the eight months since the law was enacted in April of 2008.

“It’s amazing how much activity we had in such a short period of time,” said Steven Miller, CEA director and director of the study. “Many of these projects had already established they were going somewhere else, but quickly changed gears and moved to Michigan when they learned of the tax incentives.”

Among other things, the Michigan Film Production Incentive Program provides a tax credit of up to 42 percent of the amount a production company spends while producing a motion picture in Michigan.

The MSU study, conducted for the Michigan Film Office by request of the Michigan Economic Development Corp., found that film production companies spent $65.4 million in Michigan in 2008 -- $25.1 million on direct wages and salaries and $40.3 million on Michigan goods and services.

In addition, productions directly employed 2,763 Michigan residents during the duration of the filming.

“These were short-term jobs, not unlike construction jobs that last the duration of the project,” Miller said. “In 2008, filming took place within about 23 days on average. And they were very well-paying jobs.”

Miller, an assistant professor in MSU’s Department of Agricultural, Food, and Resource Economics, said he is more than optimistic that this is a trend that will continue for at least the next three years. He estimates that total film production expenditures will grow 187 percent from 2008 to 2012.

“We base this on the experiences of Louisiana and New Mexico, both of whom passed similar laws in 2002,” Miller said. “Since Michigan’s film initiative program is much more aggressive than theirs, I would expect it to follow their trajectories at the minimum.”

A positive side effect of the film industry’s presence in Michigan is what is called “film-induced tourism.”

“This is tourism that follows the filming activity,” Miller said. “Tourism isn’t there to actually watch the filming activity, but to visit the location they saw on the big screen.”

Two good Michigan examples of that are Mackinac Island, which was the site of the 1980 film “Somewhere in Time,” and the Upper Peninsula, which was the site of “Anatomy of a Murder.”

Despite the success, Miller said film production will never replace Michigan’s big three of economic payback: manufacturing, agriculture and tourism.

“I don’t think that was really the goal of the film incentive,” he said. “To me, supporting film incentives encompasses the idea of diversifying the economy.”

To view a complete copy of the report, go here.

Co-author of the report was Abdul Abdulkadri, a visiting assistant professor in the Department of Agricultural, Food, and Resource Economics.

Housed in MSU’s College of Agriculture and Natural Resources, the Center for Economic Analysis provides science-based economic analysis and data that supports researchers affiliated with MSU and MSU Extension.

For information on the CEA, visit the Web at www.cea.msu.edu.

Established in 1979, the Michigan Film Office was created to assist and attract incoming production companies and to promote the growth of the film industry in Michigan. Visit its Web site at www.michigan.gov/filmoffice.

Michigan State University has been advancing knowledge and transforming lives through innovative teaching, research and outreach for more than 150 years. MSU is known internationally as a major public university with global reach and extraordinary impact. Its 17 degree-granting colleges attract scholars worldwide who are interested in combining education with practical problem solving.