FOR IMMEDIATE RELEASE
March 20, 2024
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Ashlee Niedospial
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Connecticut Voices for Children Report:
State Should Eliminate Film Industry Tax Credits, Utilize
Savings to Fund a State-level Child Tax Credit
New Haven, CT [March 20, 2024] - Connecticut Voices for Children today released a new report, “Cost and Distributional Analysis of CT’s Film Industry Tax Credits,” which examines the economic efficacy of Connecticut’s film industry tax credits. Given the state’s limited financial resources, the report recommends eliminating CT’s film industry tax credits and utilizing the savings to provide immediate relief for low- and middle-income families through the implementation of a state-level child tax credit. “Delivering real tax relief requires a direct investment back into the hardworking families who put money into our economy and stimulate it every day,” said Emily Byrne, Executive Director of CT Voices. “We’re calling on the Legislature to repurpose revenue from tax credits that provide a negative return on investment to tax credits that research shows will reduce child poverty and support family economic security in Connecticut.” As the report discusses, the film industry tax credits exacerbate the regressivity of Connecticut’s tax code. Moreover, Connecticut experiences a net loss in tax revenue in providing film industry tax credits. From 2007 to 2023, the state lost in net revenue an average of more than $60 million a year and a total of nearly $900 million.“The film industry in Connecticut has been consistently provided tax credits equal to or greater than the tax credits provided in other states, yet, Connecticut experiences a net loss in tax revenue,” shared report author Dr. Patrick O’Brien, Research and Policy Director at CT Voices. “Additionally, Connecticut has a regressive tax system, meaning it unfairly burdens low- and middle-income families, and the film industry tax credits contribute to the problem because they consume the state’s limited financial resources but do not provide targeted support to the state’s low- and middle-income families. To address these problems, policymakers could eliminate the film industry tax credits and fund a state-level child tax credit that will provide targeted support entirely to low- and middle-income families in Connecticut.”If Connecticut eliminates the film industry tax credits, it will gain an estimated $105.8 million a year in revenue starting in fiscal year 2025 that policymakers can use to fund other programs, such as a state-level child tax credit.In response to this recommendation, the report provides three options for the implementation of a CT Child Tax Credit (CT CTC). All three options include a five-year phase-in, and the revenue from eliminating the film industry tax credit is essentially sufficient to fund the first year of the phase-in for each option.Option 1 is a maximum $200 CT CTC in year one that is 80 percent refundable ($160), has an income floor of $1, has an income-based phase-in at a rate of 4.5 percent, is capped at three children per tax filer and costs $102.8 million.
Based on the key design and eligibility features of this option, the number of children eligible to receive the full or partial CT CTC is 550,000, or 74.4 percent of all children in the state under the age of 18. However, due to the income-based phase-in and partial refundability, the number of children eligible to receive the full refundable portion decreases to 483,700, or 65.4 percent of all children, and the number of children eligible to receive the full CT CTC decreases to 411,600, or 55.6 percent.
Option 2 is a maximum $200 CT CTC in year one that is 100 percent refundable ($200), has an income floor of $1, has an income-based phase-in at a rate of 4.5 percent, is capped at three children per tax filer, and costs $106.3 million.
Based on the key design and eligibility features of this option, the number of children eligible to receive the full or partial CT CTC is 550,000, or 74.4 percent of all children in the state under the age of 18. However, even with full refundability, the number of children eligible to receive the full CT CTC decreases to 478,600, or 64.7 percent of all children due largely to the income-based phase-in.
Option 3 is a maximum $167 CT CTC in year one that is 100 percent refundable ($167), has no income floor, has no income-based phase-in, has no cap on the number of children, and costs $101.4 million.
Based on the key design and eligibility features of this option, the number of children eligible to receive the full or partial CT CTC is 612,700, or 82.8 percent of all children in the state under the age of 18. Moreover, with no income-based phase-in, the number of children eligible to receive the full CT CTC only decreases to 602,200, or 81.4 percent of all children.
All three options would provide needed support for Connecticut’s low- and middle-income families with children, though option 3 would provide the most support for the lowest-income families.
Today, March 20th, the Joint Committee on Finance, Revenue and Bonding will hold a public hearing on a number of bills including, H.B. 5110 AN ACT ELIMINATING THE FILM PRODUCTION TAX CREDIT.
ABOUT CONNECTICUT VOICES FOR CHILDREN
Connecticut Voices for Children is a “think and do” tank working to ensure that Connecticut is a thriving and equitable state where all children achieve their full potential. In furtherance of its vision, we work in the state and nationally to advance economic justice systems change through research and policy development as well as power building and legislative advocacy.
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