Friday, February 21, 2014

House of tax credits

The production company behind House of Cards came in the night and stole $31 million from Maryland taxpayers, and presidential candidate/Governor Martin O’Malley held the door open for them. 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.”

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In recent years, Maryland has spent more than $40 million to reward movie and television production companies that choose to film in the state, and most of that largesse has gone to “House of Cards.”

Delegate C. William Frick of Montgomery County, a DC suburb, exemplifies the state government’s delusion: “Is it possible that they would just leave after we gave them $31 million?” And people scoff at western Maryland, which has more in common with West Virginia than the DC-Baltimore corridor, wanting to secede.

State and local governments push tax credits as growth opportunities. They are that, but if growth was the motivating principle, lower taxes across the board would be their object.

Politicians increase regulations and taxes to diminish the people’s power and to centralize it in the state’s hands. Then they exempt powerful business and trade lobbies that they favor for incestuous and ideological reasons, like the glamorous film industry. Being seen palling around with stars like Kevin Spacey is good for your image.

This is charitably called “picking winners,” but in other contexts it has been called fascism. Don’t mistake the politician who picks winners for a genius. The act of picking itself is what confers the winning. It’s not like he picked the winning horse at the race track. Like God, he makes it, then declares it good.

Under the tax credit scheme, where profit is gained from cozy relationships with bureaucrats and their masters, businesses’ incentives change. They focus less on serving their clients, whose interests and influence are dispersed, and more on currying favor with politicians. They in effect become agents of the state.

P.S.: Remember this story when O’Malley runs as the “competent” manager against Hillary Clinton’s experience and ruthlessness for the Democratic presidential nomination.

P.P.S.: I don’t know the political leanings of Jenna Johnson, who wrote this article for the Post, but I find her use of the word “largesse” indicative of the ideological changes at the news rag since Jeff Bezos bought it last year.

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