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Michigan Seeking To Limit Game, Film Development Tax Incentives
Michigan Seeking To Limit Game, Film Development Tax Incentives
February 18, 2011 | By Kyle Orland

February 18, 2011 | By Kyle Orland

A new budget proposed by Michigan governor Rick Snyder seeks to severely limit the amount of tax incentives available to game developers and other mass market entertainment companies operating in the state.

Under the proposed budget, existing tax rebates covering up to 42 percent of a film, TV or game production's tax expenditures would be limited to a $25 million annual cap across the state, severely limiting the number of projects that could be covered under the program.

Since the tax incentive program was first introduced in April 2008, over 130 projects have received over $648 million in total tax savings, a number the governor is seeking to reduce to make up for a $1.4 billion state budget gap.

Gov. Snyder pointed out that lower corporate tax rates across the board would help cushion the blow for entertainment companies.

Last November, a $2.7 million Ben Hogan-endorsed Wii golf game project from Pixofcator Entertainment became the first video game to qualify under the incentive program.

But Pixofactor's Sean Hurwitz says his company won't be the only one in the game industry affected if the changes go through.

"We recently had a visit from one of the top three largest video game publishers in the world, and they're looking to bring tens of millions of dollars' worth of business to us and to Michigan," Hurwitz told the AP. "There won't be any of that work without the incentive."

Snyder's budget must be approved by both chambers of the Michigan state house, where amendments could remove or alter the proposal before it becomes law.

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Nicholas Bullard-Bradley
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It would be a shame if they pass this, I can understand having to adjust the budget, and yes maybe put a cap per year, but make it a reasonable one, there is just too much to gain from bringing more of the gaming / entertainment industry to the state with the 4th highest unemployment percentage (Bureau of Labor Statistics Jan 25 2011).

Cody Scott
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it would really only make a dent in their unemployment if Michigan has a large number of unemployed people with skill sets that would be used in the industry.

Nicholas Bullard-Bradley
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This is true, most people there don't have the skill sets, but doesn't mean those who do won't come, and it would open up a few jobs, such as construction and renovations, such as taking shut down factories from the big 3, and turning them into studios. I know it was a big deal when pfizer left and Google came, and those are both higher skill set jobs. It would just be a chance to have another economy there, the fact it relied on the auto industry so much, obviously hurt as it's been down. It's not going to replace it by any means, but I don't think MI should be looking for the "ONE" to replace it rather than a few good solid ones, that way if one dies, it's not as big of an impact. Now I'm just rambling sorry haha, but as I said, I understand a limit, but what was proposed was a huge drop.

Michael Grimes
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I'm curious as far as the main reason behind this decision, would it be based off multiple games being developed that do not promote a healthy level of gaming i.e. more violent titles are being developed in Michigan that would tend to promote a negative outlook on the state? In today's economy one would think that a governor would want to bring more revenue into the state, yet as others have posted there aren't that many individuals with the skill sets within the state; Odd choice if you ask me. I wonder if boosting development of games related to the auto industry would be of benefit for the state rather than to just cut costs and eliminate the production of titles....if any developers are within the state, they sure aren't going to stick around that long if this passes....

Dave Beaudoin
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Honestly this isn't going to have that big of an impact on bringing actual jobs to Michigan. The law, as it stood was severely limited in terms of supporting anything other than a film production done wholly in the state of Michigan. Many independent developers were having all sorts of problems getting their tax refunds based on projects and as of last fall I'm pretty sure no game companies had actually been awarded any substantial breaks.

The larger reason why this doesn't matter is that Governor Snyder's budget also severely cuts public education. Basing your entire plan to bring business to a location on tax cuts, when the best thing the state has to offer outside of that are beautiful vistas that no one can get to (transportation infrastructure is also going to suffer heavily from cuts) and the schools suck isn't going to draw the sort of long term, productive residents to the state that are needed to accomplish any transformation.

Christopher Enderle
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But if public education is cut, the private education industry will surely pick up the slack and provide people a better education for cheaper! Right?

Good schools to draw cheap talent from might be the life blood of our industry. What they should be doing is subsidizing student editions of Maya and expanding/improving computer labs and slapping UnrealEd and Unity on every system.