The Golden Age of Crony Capitalism in Maryland: The Maryland Film Production Tax Credit
The producers of House of Cards and their Lobbyist, Gerard Evans are at it once again. This year, they pulled out all of the stops and threw a party for members of the Maryland General Assembly at a wine bar in Annapolis.
The purpose of the party was to pitch a bill that increases the already huge taxpayer giveaway to the Netflix series. The drawing card of the bash was none other than Kevin Spacey.
No matter that Maryland’s tax revenues are written down by $238 million from a weakening economy. Governor O’Malley’s budget calls for raiding the State’s pension fund to pay for more spending. The Maryland Film Production Tax Credit proposes to increase taxpayer transfers to large companies that are not even located in Maryland.
To date, $55 million has been spent on the tax credit. The House of Cards has received, or committed to it by Maryland, $30.9 million of taxpayer dollars! The Senate bill seeks to expand the credit by another $11 million dollars, while the House version seeks to increase the credit by $3.5 million.
Delegate Mark N. Fisher (R-Calvert) railed against the spending: “This is Crony Capitalism at its worst.” MRC Capital owns the House of Cards series. Their investors include Goldman Sachs, Netflix and AT&T.
“The primary beneficiaries of the tax credit are film production entities and that the majority of tax credits have been awarded to or encumbered for companies that are not Maryland small businesses.“
“Had the State simply purchased $30 million of Netflix stock in July of 2012 for $60 per share, the value of the stock today would be $189 million. That’s a $159 million profit! This is why States should not be using other people’s money to pick winners and losers,” said Fisher.
Film Production is a highly mobile business. Modern portable sets and computer graphics permit production to be filmed anywhere. Typically, when tax credits run out, the film production companies flee for greener pastures. In the case of House of Cards, the producers are threatening to leave Maryland if they don’t receive more corporate welfare.
According to the Maryland Department of Business & Economic Development, House of Cards will qualify for $15 million in Tax Credits through 2016. Delegate Mark N. Fisher (R-Calvert) said: “House of Cards is making a great deal of money for the Producers, meanwhile hardworking Maryland Taxpayers get 70 new tax and fee increases!”