Michigan
Capitol Confidential ^ | 5/6/2013 | Tom Gantert
Longtime Hollywood movie producer Harvey Weinstein would fit most people's
definition of a "fat-cat CEO."
Weinstein, along with his brother, Bob, founded Miramax Films in 1979 and
then sold it to Disney for $80 million. In 2005, Forbes reported that Harvey
Weinstein enlisted the help of Wall Street investment banking firm Goldman Sachs
to raise $1 billion to open another studio they called the Weinstein Co.
The Weinstein's net worth has been estimated at $150 million.
Yet, Weinstein Co. received $1.8 million from Michigan taxpayers in 2011 as
part of a reimbursement for payment to a Michigan company for post-production
work it did on the movie Spy Kids 4. The website, boxofficemojo.com, notes Spy
Kids 4 had a $27 million production budget and has grossed about $86 million
worldwide.
Michigan House Democrats have repeatedly said they would like to stop
"massive tax giveaways," and routinely complain about cozy relationships big
business allegedly has with Republicans.
However, House Democrats have universally supported the state's film subsidy
program and want to see it continued. Massive tax giveaways to Hollywood
apparently are different. For example, Disney received $40 million from the
state's film incentive program in 2010 for its expenses in making, "Oz: The
Great and Powerful." That year, Walt Disney Chief Executive Roger Iger had a
reported compensation of $39.8 million.
When the Michigan House Republicans went to eliminate the film subsidy
entirely from its fiscal year 2014 budget, House Democrats proposed maintaining
the film budget at $50 million.
"Republicans have repeatedly shown that they put their corporate donors
before Michigan residents," House Democratic Leader Tim Greimel, D-Auburn Hills,
was quoted in MLive as saying as budget talks began. "They handed massive tax
giveaways to big corporations and fat-cat CEOs, and paid for them by slashing
education funding and raising taxes on middle-class families."
But House Democratic Spokeswoman Katie Carey said they weren't talking about
film subsidies when Rep. Greimel targeted "fat-cat CEOs."
Carey, who is press secretary for Rep. Greimel, defended the film office,
saying it was the Michigan Economic Development Corp. Greimel was referring to
when mentioning the tax giveaways.
"The MEDC is a slush fund the governor uses to funnel tax dollars to big
corporations and CEOs," Carey said in an email. "That money comes from the state
without any requirement that new jobs are created. The House Democratic Caucus
believes we need transparency and accountability in government, and we need
economic development programs that actually work, not empty promises. The MEDC
for far too long has wasted tax dollars on proposals that don't work and it must
stop."
Michigan Film Office Spokeswoman Michelle Begnoche confirmed that her office
is part of the MEDC.
"Politicians of both parties score points with voters by criticizing
corporate handouts and special treatment, yet in Lansing they defend even the
most egregious example," said James Hohman, a fiscal policy analyst with the
Mackinac Center for Public Policy.
Hohman said the film incentive was the single largest taxpayer-funded handout
Michigan offers.
Most tax deals require some capital investment, such as improving land or
buildings, and the tax incentives are just a fraction of those investments,
Hohman said. However, the film subsidies simply require operational spending and
the incentives represent a large share of that spending.
The film incentive gives up to 32 percent back to production companies on
expenses.
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