Building a 'House of Cards' Out of Tax Dollars

The Netflix drama is threatening to leave Maryland unless it gets more public funding.

Kevin Spacey in season 2 of Netflix's "House of Cards."

'My next scheme involves getting taxpayers to pay more for this picture.'

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In a move its protagonist, Vice President Frank Underwood, could be proud of, the studio that produces Netflix’s “House of Cards” is all but attempting to extort tax dollars out of the state of Maryland. As the Washington Post reported, Media Rights Capital has threatened to move production of its show about an absurdly corrupt Washington elsewhere if it doesn’t get a new slew of taxpayer money.

In a letter to Gov. Martin O’Malley, D-Md., the studio said it would “break down our stage, sets and offices and set up in another state” if it receives insufficient taxpayer largesse to film the show’s third season. “I wanted you to be aware that we are required to look at other states in which to film on the off chance that the [subsidy] legislation does not pass, or does not cover the amount of tax credits for which we would qualify,” the letter said. “I am sure you can understand that we would not be responsible financiers and a successful production company if we did not have viable options available.”

[See a collection of political cartoons on Congress.]

Over at our Economic Intelligence blog this week, the Mercatus Center’s Matthew Mitchell explained why giving tax subsidies to the film and television industry is a bad idea. As he wrote, these subsidies don’t work as advertised, suck money away from better uses and foster unsustainable economic models, trying to gin up an entertainment industry in places that can’t really support one. Many studies on film subsidy programs in states from Connecticut to Louisiana have shown the same thing.

But another problem is that these subsidy programs encourage studios to play states off against each other, which becomes even easier when nearly every state has such a program. The Center on Budget and Policy Priorities noted in a good primer that, “given the economics of film production, states will have to give movie-makers generous subsidies indefinitely in order to ‘stay in the game.’”

As one Maryland state delegate correctly noted: “We’re almost being held for ransom.” Already, “House of Cards” has received more than $20 million in tax subsidies from Maryland. But the state now needs to feed the beast again or see the studio take its ball and go to a new court. This is a game that Maryland can never win.

I actually lived in one of the Baltimore neighborhoods where parts of “House of Cards” were filmed at the time the show was there. And yes, having the show around certainly brought a few more dollars into local drinking establishments. But it’s hard to argue there was any permanent economic effect. The studio came in, did its thing and left. Even if it was employing local residents – which is always a big if when it comes to film subsidy programs – there was no permanent economic development infrastructure put into place that could exist in the absence of subsidies.

[See a collection of political cartoons on the economy.]

As Alyssa Rosenberg explained at ThinkProgress, you really can’t blame the “House of Cards” crew for trying to get the most bang out of the bucks state governments are throwing at them. Indeed, it’s the faulty assumption that these credits do economic good, as well as the terror politicians feel at the notion that jobs will shift to another jurisdiction, that’s at the heart of the problem.

As such, it would take nothing short of a nationwide effort to cut off this nonsense for it to actually end; as long as someone somewhere is willing to engage in the race to the bottom, it’s going to continue. In the meantime, it may be that Frank and Claire Underwood will be moving to some new digs in whatever state’s willing to pay the most for the privilege of hosting them.