Maryland House Budget bill sez: House of Cards, You CAN'T Leave...

[Bricker]

…or we’ll seize your film equipment.

As Dave Barry used to say, I am not making this up:

Responding to a threat that the “House of Cards” television series may leave Maryland if it doesn’t get more tax credits, the House of Delegates adopted budget language Thursday requiring the state to seize the production company’s property if it stops filming in the state.
Media Rights Capital, the Beverly Hills, Calif., company producing the popular Netflix show, wrote Gov. Martin O’Malley that it was putting off work on its third season until it could be assured that sufficient tax credits would be approved. If those weren’t forthcoming, it said it would break down its film stage and move it to another state.
Del. William Frick, a Montgomery County Democrat, proposed the provision, which orders the state to use the right of eminent domain to buy or condemn the property of any company that has claimed $10 million or more credits against the state income tax. The provision would appear to apply only to the Netflix series, which has gotten the bulk of the state credits.

This is a very unwise choice of how to exercise the power of eminent domain.

[Sam_Stone]

Wow. That’s a pretty thuggish move.

On the other hand, you could also ask why a business that employs millionaires should get millions of dollars in tax breaks - especially from Democrats who whine about corporate tax giveaways.

[John_Mace]

I would be interested in seeing the language of the agreement they had. If there was some stipulation that the filming had to continue in Baltimore for “x” number of years in exchange for “y” tax credits, then one might understand if Netflix got “y”, but isn’t completing “x”. Not that this would justify this action, if it is taken, but it might explain what is going on.

At any rate, one would assume that the Senate (normally a more sober body) will not pass this and it will die in the House.

[Little_Nemo]

@John_Mace

I would be interested in seeing the language of the agreement they had. If there was some stipulation that the filming had to continue in Baltimore for “x” number of years in exchange for “y” tax credits, then one might understand if Netflix got “y”, but isn’t completing “x”. Not that this would justify this action, if it is taken, but it might explain what is going on.

I agree. The article says the production company had received more than ten million dollars in tax credits from Maryland. So it’s really a matter of what they owe in exchange. Maryland might have a legitimate claim.

[Bricker]

@Little_Nemo

I agree. The article says the production company had received more than ten million dollars in tax credits from Maryland. So it’s really a matter of what they owe in exchange. Maryland might have a legitimate claim.

I agree it’s possible – but I can’t find any reference to any such deal.

So far as I can see, they took the tax credits because the law entitled them to take the tax credits.

Isn’t it the burden of someone claiming a deal existed to produce some evidence of the deal?

[Bricker]

The Post article implies that there was no special deal:

Each year Maryland sets aside $7.5 million to reward production companies that film in the state. That’s not nearly enough to cover the $15 million the makers of “House of Cards” expected to get for filming Season 3 in the coming months. The Senate has approved increasing the pot to $18.5 million, but the House has yet to take action.

What evidence of a deal is there?

[kaylasdad99]

@Bricker

The Post article implies that there was no special deal:

Each year Maryland sets aside $7.5 million to reward production companies that film in the state. That’s not nearly enough to cover the $15 million the makers of “House of Cards” expected to get for filming Season 3 in the coming months. The Senate has approved increasing the pot to $18.5 million, but the House has yet to take action.

What evidence of a deal is there?

Way outside my area of interest, but is there any way of looking up the antecedents to the legislation that has Maryland setting aside that $7.5M, or the substantial increase the Senate has approved?

[Bricker]

@kaylasdad99

Way outside my area of interest, but is there any way of looking up the antecedents to the legislation that has Maryland setting aside that $7.5M, or the substantial increase the Senate has approved?

Sure. In 2011, Maryland amended their tax credit law, increasing the amount of credits from $1 million annually to $7.5 million annually:

A new $7.5 million tax credit for film productions in Maryland takes effect Friday, and with the industry professionals already here, the state is back in the game and ready for its close up.
“What it does first and foremost is creates jobs, provides revenue to Maryland businesses, and creates economic activity with a trickle-down effect,” said Maryland Film Office Director Jack Gerbes. The Maryland Film Office is a part of the state’s Department of Business and Economic Development.
The new tax credit, which will go into effect July 1, increases the annual state incentives for film productions from $1 million annually – or 650% each year. These funds are used to lure different production companies to Maryland locations to film movies, television programs or commercials, or to work on digital or animated projects. And the money Maryland is investing in the program, Gerbes and other supporters of the incentive said, will create larger revenues through salaries, local trade, tourism, and international exposure.
“This is a very good investment for Maryland,” said Debbie Donaldson Dorsey, chairman of government relations for the Maryland Film Industry Coalition.
Maryland still does not have the most generous tax incentives of any state, but supporters say that the state is still extremely competitive. Senate Budget & Taxation Committee Chairman Ed Kasemeyer, D-Howard, who sponsored the credit, said that Maryland already has two very important things that are attractive to those scouting locations for films: A variety of different kinds of locales, and thousands of talented personnel available to work on productions.
“This amount is a good starter to get us back in the game,” Kasemeyer said.

[Ravenman]

I’m actually more interested in how the state claimed it could seize the Baltimore Colts’ stuff, had they not fled in the middle of the night.

[Bricker]

@Ravenman

I’m actually more interested in how the state claimed it could seize the Baltimore Colts’ stuff, had they not fled in the middle of the night.

Well, I don’t know the specifics of Maryland eminent domain law, but Kelo v. New London made clear that:

The disposition of this case therefore turns on the question whether the City’s development plan serves a “public purpose.” Without exception, our cases have defined that concept broadly, reflecting our longstanding policy of deference to legislative judgments in this field.

So it looks like the state can do this, legally. I’m arguing it should not, that the choice is unwise.

[Sam_Stone]

@Bricker

Sure. In 2011, Maryland amended their tax credit law, increasing the amount of credits from $1 million annually to $7.5 million annually:

What a coincidence - pre-production on House of Cards started in 2009, and production started in 2011.

I’ll bet at the very least there were backroom deals made here, and some politicians have their panties in a bunch because they feel like they were played - or are being played now. So now they’re playing hardball.

[Shodan]

Stealing their equipment is a little more than hardball, ISTM. It reinforces what I have thought already - Kelo v. New London means the state can control anything they want about anything - if they decide a company will pay more in taxes than private property, they can compel the owners of the private property to sell. All businesses serve a public purpose, therefore it doesn’t matter if they got a tax break or not - the state has absolute control.

“If you have a business, you didn’t build that” has moved inexorably to “if you have a business, you don’t own that .”

Regards,
Shodan

[Miller]

I don’t see how this benefits the state, or harms the production company. Doesn’t eminent domain require the state to pay fair market value for whatever they seize? And what public purpose is served by the state of Maryland owning a bunch of film sets and camera equipment? Unless they’re going to go into television production, all they can do is sell the stuff off - most likely, to the company they just took it from. The “value” in the show is entirely in the people attached to it - the director, actors, writers, and so on. And I can’t imagine that the state has any claim on the intellectual property for House of Cards, or the labor of any of the people involved in creating it.

Has anyone posted this in the “Stupid Liberal Idea of the Day” thread yet?

[Bricker]

@Shodan

Stealing their equipment is a little more than hardball, ISTM. It reinforces what I have thought already - Kelo v. New London means the state can control anything they want about anything - if they decide a company will pay more in taxes than private property, they can compel the owners of the private property to sell. All businesses serve a public purpose, therefore it doesn’t matter if they got a tax break or not - the state has absolute control.

“If you have a business, you didn’t build that” has moved inexorably to “if you have a business, you don’t own that .”

Regards,
Shodan

I understand the sentiment – but in light of the fact that this is simply a bill, and not a law (remember your Schoolhouse Rock!) perhaps “inexorably” is slightly overstating the case.

[Bricker]

@Miller

I don’t see how this benefits the state, or harms the production company. Doesn’t eminent domain require the state to pay fair market value for whatever they seize? And what public purpose is served by the state of Maryland owning a bunch of film sets and camera equipment? Unless they’re going to go into television production, all they can do is sell the stuff off - most likely, to the company they just took it from. The “value” in the show is entirely in the people attached to it - the director, actors, writers, and so on. And I can’t imagine that the state has any claim on the intellectual property for House of Cards, or the labor of any of the people involved in creating it.

Has anyone posted this in the “Stupid Liberal Idea of the Day” thread yet?

Is it a liberal idea?

Granted, the Democrats approved it, but I’m not sure I’m comfortable with the wide paintbrush just yet.

Seizing the equipment would cost the film company money. "Fair market value’ is not “replacement value.” Nor does the calculation include the lost time needed to recoup.

[Bone]

This should bode well for business looking to locate in Maryland. Really, the only saving grace is that it was just proposed and isn’t actually law yet.

[Miller]

@Bricker

Is it a liberal idea?

Granted, the Democrats approved it, but I’m not sure I’m comfortable with the wide paintbrush just yet.

Well, it’s a stupid idea from a liberal. Besides, you guys need all the help you can get in that thread.

Seizing the equipment would cost the film company money. "Fair market value’ is not “replacement value.”

True, but depending on how much Maryland marks down the equipment when they resell it, the studio might end up turning a profit on the deal.

[Shodan]

@Bricker

I understand the sentiment – but in light of the fact that this is simply a bill, and not a law (remember your Schoolhouse Rock!) perhaps “inexorably” is slightly overstating the case.

No doubt it is overstating, but I hate Kelo v. New London with such a passion that it is clouding my judgment. Because what appears to be the principle established is so inimical to limited government. Even if you pay, in full, all taxes on whatever you own, the government gets to decide if you get to keep it or not. Not because you broke any law, either. Neither the homeowners in Kelo nor the House of Cards company broke any law, or were behind in their taxes. Yet their property is not theirs to dispose of.

I would wish, not only that this bill does not pass, but that Kelo is reversed. Anything I pay taxes on is serving a public purpose. What do I own that I didn’t pay tax on?

Regards,
Shodan

[Sam_Stone]

@Miller

I don’t see how this benefits the state, or harms the production company. Doesn’t eminent domain require the state to pay fair market value for whatever they seize? And what public purpose is served by the state of Maryland owning a bunch of film sets and camera equipment? Unless they’re going to go into television production, all they can do is sell the stuff off - most likely, to the company they just took it from. The “value” in the show is entirely in the people attached to it - the director, actors, writers, and so on. And I can’t imagine that the state has any claim on the intellectual property for House of Cards, or the labor of any of the people involved in creating it.

Has anyone posted this in the “Stupid Liberal Idea of the Day” thread yet?

How is this different than any other threat? Sure, the state gains little benefit from seizing their assets - just like Tony Soprano doesn’t benefit from shooting you in the head. The real value lies in the threat of shooting you in the head unless you do something that benefits him.

It’s ironic that this is being played out against ‘House of Cards’ - a cynical show about the utter debasement and corruption of Washington politics. If the bill passes and I were the showrunner of HoC, I’d agree to stay - and then I’d make the next season’s plot a thinly veiled slam against the politicians who pulled this stunt and make them all look as pathetic as possible.

[Sam_Stone]

@Shodan

No doubt it is overstating, but I hate Kelo v. New London with such a passion that it is clouding my judgment. Because what appears to be the principle established is so inimical to limited government. Even if you pay, in full, all taxes on whatever you own, the government gets to decide if you get to keep it or not. Not because you broke any law, either. Neither the homeowners in Kelo nor the House of Cards company broke any law, or were behind in their taxes. Yet their property is not theirs to dispose of.

I would wish, not only that this bill does not pass, but that Kelo is reversed. Anything I pay taxes on is serving a public purpose. What do I own that I didn’t pay tax on?

Regards,
Shodan

Agreed with all of this. And the pathetic part of it all is that the developer who was given 91 acres of land for $1 failed to find financing to develop it, and the whole project collapsed. Nine years after the decision, the entire area is now vacant, and generates no revenue at all for the city. Just a whole lot of lives upended and a new precedent that did enormous damage to liberty.