$3 Million per show Tax Credit for Berkshire Groups that send shows to Broadway?

A $3 Million tax credit and reimbursement of up to 35% of labor costs of a show could be a game changer.

A $3 Million tax credit and reimbursement of up to 35% of labor costs of a show could be a game changer.

Possible New Boost to Berkshire Shows that make it to New York?
by Larry Murray

Geoff Edgars reports in the Boston Globe that legislators are proposing a tax credit for producers who bring pre-Broadway tryouts to Boston and other Massachusetts cities. This could include the Berkshires. Of course, this might require nonprofits to set up free standing for-profit affiliates to take advantage of the credits. Such is the nature of politics today that it appears that for-profit corporations get more help than nonprofits.

If this tax credit makes it into the Commonwealth’s budget, it could – in just a few shows – equal the whole state arts council budget. The credit would provide up to $3 million in tax free benefits to a show that runs in the state before opening in New York, or a touring production that begins in Massachusetts. The credit would also reimburse up to 35 percent of state labor costs.

If passed, this could have an amazing effect on our four major Berkshire theatre companies, Barrington Stage, Berkshire Theatre Group, Shakespeare & Company and the Williamstown Theatre Festival. All have existing connections with New York producers and have sent shows from the Berkshires to Broadway. Tina Packer’s Women of Will is currently on stage in New York.

Proponents of the bill cite its possibility for creating jobs and boosting the Massachusetts economy, while those opposed point to the state’s disputable film tax credit program, as well as the fact that there is no guarantee a show will be successful enough in Boston to bring a large amount of business.

Josiah Spaulding Jr., president of Citi Center for the Performing Arts, and Richard Jaffe, vice president of Broadway in Boston, are behind the bill, with support from state reps Nick Collins and Paul McMurtry, who filed a theater tax credit bill late last month. The venue that Spaulding represents and the road shows that Broadway in Boston brings to the downtown theatres provide considerable financial activity for Boston’s Midtown Cultural District, and this could mean even more.

Watch Closely

But the two proponents of the bill are notoriously self-serving in their political efforts, and I would strongly urge the nonprofit community to look closely at the bill and make sure that their shows are included in these incentives. The nonprofit sector of the Massachusetts theatrical picture employ far more residents and artists than the commercial sector over the long run, and need the financial incentives just ad urgently as does the for-profit operators. Still to be answered is the question of where the payback for this subsidy is in the overall economic picture.

Over at American Repertory Theatre, their production of Pippin has been announced for New York in March, 2013. Annie Get Your Gun, Oklahoma! and more have previously begun their runs in Boston, and Emerson College will soon present the new musical Tuck Everlasting in a pre-Broadway tryout this summer. This summer, as last, the Williamstown Theatre Festival will stage productions of musicals that have Broadway in mind. This year it is Bridges of Madison County, last summer it was Far From Heaven.

How do tax credits work?

So, what;’s the deal with tax credits? First, it should be understood that, as in film, the producing company must provide the initial funds to actually make the show. The tax credits can then effectively result in reducing the musical or play’s overall budget after the respective production company files state tax returns for the appropriate year. Some states, such as Michigan and New York, allow for refundable tax credits. Such tax credits essentially allow the makers to receive a cash refund should the tax liability incurred on the production fall below the eligible tax credit. For example, if come tax day the production owes $100,000 in taxes to the state in which the film was shot, yet has earned a tax credit in that state of $150,000, that production would receive a refund of $50,000. Non-refundable tax credits, on the other hand, would allow a credit to reduce the aforementioned tax liability to zero, but would provide no such cash refund.

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