Never-Used Tax Break Could Help Rebuild Motown

DETROIT (AP) -- A little-known tax break for music producers that could help put Motown back on the music map has been available for two years in Michigan -- but no one has taken advantage of it.
The state offers tax credits of up to 42 percent for the production of music CDs and music videos. The break was designed to lure big-name artists to record in Michigan, which already is home to Eminem, Kid Rock and Bob Segar.
The incentive is tucked away in a package of tax breaks for the movie industry, and state officials have put most of their efforts into growing the local film business instead of promoting the music break, the Detroit Free Press reported Sunday.
That could be why no one has used the tax credit, available since April 2008, that music industry insiders say has potential to regrow the state's music business.
"If we could market that with the labels, do you know how much business we could bring to Detroit?" asked Brian Pastoria, a partner at Harmonie Park Studios, a Detroit recording studio. "I think it could start something. This is huge."
He said his contacts at major recording labels were intrigued when he told them about the tax breaks. Pastoria, who has worked with Aretha Franklin, Eminem and the Velvet Hearts, is working on bringing production of a tribute album for British rock legend Frankie Miller to Detroit.
The tax break can be claimed only by those who spend at least $50,000 in the state, a threshold that can be met by big-name artists but likely not others. Companies must apply for the tax breaks in advance, and it can take a year before the money is paid.
"They are going to exclude a lot of independents," said Al Sutton, who records and mixes Kid Rock's albums and owns Rust Belt Studios in Royal Oak.
Ken Droz, a spokesman for the Michigan Film Office, which administers the incentives, said musicians with small budgets don't need the tax breaks. He also said that the film office has no plans to market the music tax breaks.
Several albums -- including the latest by the Dave Matthews Band -- have been recorded in Louisiana, which has a similar but smaller tax credit of 15 percent to 25 percent. The minimum spending requirement there is only $15,000. Last year, the state made the tax credit refundable so companies can now receive checks from the state, not just credits against tax liabilities.
The Michigan tax breaks are starting to draw interest. Dickinson Wright, a Detroit-based law firm, has a Nashville, Tenn., office that's looking at the incentives for some of its clients, said Steven Enwright, one of its entertainment attorneys.
Unity Studios, which is building three sound stages in Detroit suburb Allen Park, plans to operate at least one room for recording music, said Eric Cedo, the company's director of marketing.
"The music industry and film industry go hand in hand," he said. "We really need to get back to what Motown did."