• Home
  • About
    • For What it’s Worth
    • Michael Rushton
    • Contact
  • AJBlogs
  • ArtsJournal

For What It's Worth

Michael Rushton on pricing the arts

Today in film tax credits (Updated December 2, 2014)

February 21, 2014 by Michael Rushton 1 Comment

created six thousand jobsIt never ends: production companies asking for, and getting, tax credits for local production when the economic case is cloudy, to say the least. The Washington Post reports:

A few weeks before Season 2 of “House of Cards” debuted online, the show’s production company sent Maryland Gov. Martin O’Malley a letter with this warning: Give us millions more dollars in tax credits, or we will “break down our stage, sets and offices and set up in another state.” …

Both seasons of “House of Cards” were filmed in Maryland, mostly in Baltimore and Harford County, although the House chamber in Annapolis was used as a set.

In addition to bringing a burst of buzz and excitement, the show created nearly 6,000 jobs and pumped more than $250 million into the state economy, economic development officials say.

In May, O’Malley (D) visited the set to promote film tax credits, exulting that Maryland was becoming “the premier destination in America for film production.”

Sure it is.

After each season, Maryland has reimbursed Media Rights Capital, the show’s California-based production company, for a chunk of production expenses. For the first season, that totaled more than $11 million in tax credits. For the second season, reimbursements could reach $15 million.

Maryland economic development officials wanted to promise “House of Cards” another $15 million in credits for the third season, which was supposed to start filming in early spring.

But lawmakers have not agreed to boost the $7.5 million in tax credits the state allocates annually for film and television projects. Two bills that would increase the ceiling — to $11 million or $18.5 million — are in committee. House leaders say some increase is likely, but whether it will be enough to keep the show in town is unclear.

Two questions.

First, if these production credits are a boon to the state’s economy, why put a ceiling on the amount of the credits? Why not make it unlimited, and let the state become fabulously wealthy? But we know the answer: film tax credits help the production companies who lobby for them, but we have scant evidence that the state as a whole benefits.

Second, where do they get those economic impact numbers? imdb.com says the budget for Season 1 of House of Cards was $60 million (films have been made in Maryland for 1/1000th that cost, and have done rather well). Yet somehow this has an “economic impact” of $75 million, or, on another day, another estimate, $140 million. Mind you, the show has created 2,000 jobs. Or maybe 6,000. Or … who knows?

Film tax credits are not arts policy, they are industrial policy. And they are bad industrial policy – chasing klieg lights makes no more sense than the policy of states’ chasing smokestacks in the previous century. Yet states continue to fall for the idea that somehow this all amounts to strategic economic development.

Update: from Alyssa Rosenberg.

Update, December 2, 2014: The Washington Post reports:

Maryland’s tax incentives for film production only brings in 10 cents for every dollar spent, and the legislature should let it expire in 2016, a study from the Department of Legislative Services recommends. …

For every dollar granted by the credit, the state receives 6 cents, and local governments receive 4 cents. About 97 percent of the $62.5 million Maryland has spent on the tax credit since the beginning of the 2012 fiscal year has been spent on two shows: “House of Cards” and “VEEP.” “House of Cards” is filmed in Baltimore, and “VEEP” is filmed in Baltimore and Sykesville, Md., according to IMDb.

“Since the credit does not provide sustainable economic development and provides a small return on investment to the state and local government, DLS recommends that the General Assembly allow the film production activity tax credit to sunset as scheduled on July, 2016,” the study reads.

Share:

  • Click to email a link to a friend (Opens in new window) Email
  • Click to share on Facebook (Opens in new window) Facebook
  • Click to share on X (Opens in new window) X
  • Click to share on LinkedIn (Opens in new window) LinkedIn
  • Click to print (Opens in new window) Print

Related

Filed Under: issues

Trackbacks

  1. For What It's Worth | Film tax credits, jobs, and lost incomes says:
    June 2, 2014 at 5:33 am

    […] granted to commercial film and television production, because: jobs. I recently posted re Maryland here. Today, Hollywood Reporter, er, […]

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Michael Rushton

Michael Rushton taught in the Arts Administration programs at Indiana University, and lives in Bloomington. An economist by training, he has published widely on such topics as public funding of the … MORE

About For What It’s Worth

What’s the price? Everything has one; admission, subscriptions, memberships, special exhibitions, box seats, refreshments, souvenirs, and on and on – a full menu. What the price is matters. Generally, nonprofit arts organizations in the US receive about half of their revenue as “earned income,” and … [Read More...]

Archives

Recent Comments

  • Carlo on What to do with the NEA? Make it Conservative?: “The Kennedy Center is offering $25 tickets in only select orchestra seating for the performances of Washington National Opera: Porgy…” May 20, 14:17
  • Carlo on Art in Turbulent Times: “The Kennedy Center today is selling discounted tickets for the Washington Opera for $20.” May 1, 21:31
  • Montague Gammon III on Art in Turbulent Times: “We would like to think that a Trumped Kennedy Center would experience a significant downturn in attendance, but we should…” Apr 22, 05:51
  • Ed Comet on What do to with the NEA? Pull the plug?: “The author has gone to the Grand Canyon with a magnifying glass, and found the rocks uninteresting.. The NEA does…” Apr 12, 16:42
  • Brtian Newhouse on What do to with the NEA? Pull the plug?: “I think that for arts patronage to work, there has to be some consensus that the activities of making and…” Apr 12, 14:28
Return to top of page

an ArtsJournal blog

This blog published under a Creative Commons license

Copyright © 2025 · Magazine Pro Theme on Genesis Framework · WordPress · Log in