Lawmaker Responds To Studio's 'More Tax Breaks Or We Walk' Letter With Eminent Domain Seizure Amendment

from the I-guess-it's-back-to-Hollywood,-where-people-treat-each-other-right dept

Here's the sort of thing that results when bad behavior is greeted with worse behavior.



The bad behavior is production companies seeking tax breaks. Politicians love to grant these tax breaks because a) they like having celebrities around and b) they've bought into the perception that somehow shooting a movie or TV series in town is a net fiscal gain for the community. Generally speaking, the first is almost always true and the latter is seldom ever true. A 2010 Tax Foundation study found that most cities granting tax breaks make back less than $0.20 per dollar "invested."



Media Rights Capital, the company behind Netflix hit "House of Cards," has already collected $26.6 million from the state of Maryland. But it isn't enough.

It began late last month when Charlie Goldstein, the senior vice president of Media Rights Capital, sent a letter to Maryland Gov. Martin O'Malley, threatening to leave the state if the show was not provided with millions of dollars more in tax credits for which it believes it should qualify.



In the letter, Goldstein wrote that the company would "break down [their] stage, sets and offices and set up in another state."

Delegate Bill Frick introduced an amendment to a budget bill that would allow Maryland to seize the production company's property under eminent domain in the event it leaves the state.

Frick said the move was inspired by the style of politics depicted on "House of Cards" and by the show's ruthless protagonist, Frank Underwood, who is played by Kevin Spacey. He told Business Insider, he thought, "How would Frank Underwood respond?" Frick said his eminent domain plan was the "most dramatic" thing he could think of to counter MRC's threat.

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This is standard operating procedure for studios -- playing cities and states off each other in hopes of obtaining perpetually escalating tax breaks in exchange for a steadily diminishing ROI on taxpayer funds. Totally the sort of thing the state should have expected when it started handing out free money.The response, however, was even worse. Rather than calling the studio's bluff and helping it pack its bags, a legislator chose to do this:Of all the wrong things legislators have ever done, eminent domain is one of the very worst. Bill Frick has an excuse, however.In what will surely be recorded in the legislative history books as a "Frick move," a legislator has managed to outdo the studio in terms of sheer, manipulative nastiness. Yes, Frick would do Frank Underwood proud, but is that what wewant from our legislators?Frick's amendment doesn't specifically name the studio but its cutoff line of $10 million or more in tax breaks leaves "House of Cards" stranded on an island made of taxpayer funds. It also puts the legislator in the rare position of openly espousing Marx's calls for the State to seize the means of production from the Elite, something that plays better in hazy dorm rooms than in a system where corporations have been determined to be "people."While Frick's amendment passed a voice vote in the House of Delegates, the state Senate approved its own legislation -- which increases the tax credits available to companies -- with a 45-1 vote. Either way this pans out, the taxpayers will lose -- whether they're footing the bill for more tax breaks that won't create long-term wealth, or watching their representatives carve a legislative toehold for the future seizure of certain businesses.

Filed Under: bill frick, eminent domain, house of cards, maryland, movies, studios, tax breaks, tv

Companies: media rights capital, netflix