Last Friday the Washington Post broke the story of Netflix's "House of Cards" production company trying to shake down Maryland Taxpayers for at least $10 million:
Give us millions more dollars in tax credits, or we will "break down our stage, sets and offices and set up in another state."
posted the ransom note.
The Sun followed the next day, informing readers that not paying would be bad. Very bad.
"A leading Democratic lawmaker says the O'Malley administration isn't doing enough to keep the popular Netflix drama "House of Cards" in Maryland," said the report by Luke Broadwater. Further down he quoted Jed Dietz, head of the Maryland Film Festival, panicking:
"If we don't correct it, why wouldn't they leave?" he said. "They love being here, and I would hate to see us jeopardize that. It would be horrible if we lost them. If we kicked them out, it would take us years to get our credibility back."
By all means, Jed. Let's have some credibility.
Nowhere in the Sun's story is there any mention of the stark and obvious fact that this whole shakedown is--like the public subsidies for giant stadia and Grand Prix racing--based on bullshit.
"As a Maryland taxpayer and 'House of Cards' viewer, I am aghast," says Greg LeRoy of Good Jobs First, a
labor [mostly foundation]-funded non-profit that studies tax breaks for businesses. "We have not done research on film subsidies, a) because no one has asked us to and b) like stadiums, there is a longstanding left-right consensus that they don't create net new economic activity, just move it around (what economists call ‘rent-seeking'). You and I do not have more leisure time or leisure dollars just because we have an additional TV show to choose from."
The Tax Foundation emailed us later to tout its take on this matter. "It's like Frank Underwood wrote this letter himself," they wrote on their blog.
As tax incentives for movie studios are a relatively new scam, they illustrate well the pattern of well-heeled industries carving out special exceptions for themselves on the theory that--in their business at least--the provision of jobs for regular workers is a charitable activity more or less unconnected to general profitability or the insane compensation enjoyed by those at the top. Canada started it, circa 1997. Louisiana (that bastion of good government) followed suit in 2002.
It is self-evidently a zero-sum game. But instead of making a treaty or other agreement to stop it, states instead rushed in with their own tax credit programs in a mad scramble to attract star power (and jobs). By 2009 the Sun was editorializing in favor of "the tax incentives arms race":
"It's fair to argue that now is not the time to spend from the state budget. But the beauty of the film production tax credit is that it's self-funded. The producer gets back only some of what his company has spent in the state. Maryland taxpayers still come out ahead - and using the state as a backdrop in film and television doesn't exactly hurt the local tourism trade."
The newspaper did not mention the rent its parent company had collected from production companies which used its empty offices as the set for fictional newspapers. David Simon
did just that for the last season of "The Wire," [Correction: No. He built a copy outside the city; sorry, David Simon] and "House of Cards" has reportedly done the same for the past two seasons.
Simon, perhaps surprisingly, given his usual principled stance against institutional injustice, has written in support of the tax breaks, arguing (on a Sun comment forum, no less!) that getting "100 percent of nothing" (by ending the subsidy) would be sub optimal. (The thread seems to be gone, alas, but we memorialized its existence here). Most lawmakers agree with him.