‘House of Cards’ and the massive business of tax incentives for your favorite shows and movies


Kevin Spacey in a scene from “House of Cards” (AP Photo/Netflix, Melinda Sue Gordon)

The second season of Netflix’s highly-publicized political series “House of Cards” debuted last week, offering another glimpse of Maryland playing D.C. (along with shots of actual D.C.).

And that could potentially be it for “House of Cards” filming near the nation’s capital. The show (and by the show, we mean Media Rights Capital, the show’s production company) has threatened “to break down our stages, sets and offices and set up in another state” — unless Maryland coughs up enough tax incentives.

These tax incentives — which could total $1.5 billion each year across the film industry, according to one survey — are the reason why Cleveland filled in for New York City (in “The Avengers” and “Spider-Man 3″) and Washington, D.C. (in the forthcoming “Captain America: The Winter Soldier”); Charlotte also pretended to be D.C. (for the TV series “Homeland”); Pittsburgh, New York City and Chicago stood in for the fictional Gotham City (in “Batman Begins,” “The Dark Knight” and “The Dark Knight Rises”); New Orleans played a futuristic Kansas (in “Looper”) and an alien-ridden Hawaii (“Battleship”); and Atlanta passed for 1970s New York City (in “Anchorman 2″).

Production incentives are available in almost every state in the U.S., and some places can offer up to a 35 percent tax credit on certain expenses, according to the National Conference of State Legislatures.

The exact incentives offered vary in each state, but Maryland, for example, typically reimburses companies for about a quarter of their qualified expenses, as the Washington Post’s Jenna Johnson explains here.

This obviously raises the question of why states are offering these incentives, forking over so much money to convince the company bankrolling a movie like “Battle: Los Angeles” (set in California, as you would expect) to film in Louisiana.

The answer: Productions can potentially mean big, big business for the places where they film. “Iron Man 3,” the biggest movie at the box office last year ($1.2 billion in worldwide grosses), received $20 million in tax incentives from North Carolina and “generated $8.99 in economic output for every dollar of tax credit received,” according to an analysis prepared for the Motion Picture Association of America.

Not everyone is in favor of these credits. Mark Vitner, an economist at Wells Fargo, told NPR that while productions bring in lots of money, there are downsides:

“It doesn’t improve our labor force. It doesn’t provide us with any fixed assets that are going to improve our competitiveness. … The only thing that keeps bringing folks here is our willingness to continue to, to give them money.”

Some states have moved away from film incentives. Connecticut decided to halt film tax credits for two years (Ron Howard called that “a horrible mistake“), while Arizona stopped providing them in 2010. The film incentives in North Carolina are set to expire at the end of this year, with a discussion expected this spring over whether to extend the program into 2015.

Tax credit proponents promote the impact of productions on the tourism industry. Visitors to New Zealand want to take the “Lord of the Rings” tour to see if they can visit every filming site in less time than it takes to sit through the first “Hobbit” movie; why go all the way to Hawaii and just relax on beaches and hike on volcanoes when you can visit the place where “Jurassic Park” filmed?

For many films, particularly huge blockbusters like the ones we’re discussing, there are multiple filming locations. “Captain America: The Winter Soldier,” which comes out in April, is set in Washington. The production filmed some scenes in Washington (if you want to show Captain America jogging on the Mall, you go to the Mall) and went to Cleveland to film other scenes that were also set on the District’s streets (while taking advantage of Ohio’s sizable incentives).

There are small benefits for locals in these places, who get to appear in the blockbuster movies they’ll line up to see months later. Marvel paid extras to appear in “Captain America: The Winter Soldier” last year. And while “Batman Begins” and “The Dark Knight” filmed in Chicago, the third film in that series (“The Dark Knight Rises”) made its way to Pittsburgh and New York.

The head of the Pittsburgh Film Office claimed that the filming of a sequence at Heinz Field requiring more than 10,000 extras reduced unemployment in southwest Pennsylvania by one percentage point. (And Chicago wasn’t entirely abandoned by Christopher Nolan, who directed the three “Dark Knight” films. “Man of Steel,” the Superman reboot he produced last year, filmed in the Windy City.)

This competition for luring films isn’t only between states in the U.S., either. “The Avengers” was partially filmed in New Mexico; that state doled out more than $22 million in tax credits, which is less than half of Robert Downey Jr.’s $50 million payday for the film.

But for the sequel, the Avengers will follow in the footsteps of two other Marvel movies – “Thor: The Dark World” (which opened last November) and “Guardians of the Galaxy” (which arrives in August) — which both filmed in London. “The Avengers: Age of Ultron,” due out next year, is basing its production in London. Marvel says the movie will film there and in Johannesburg, South Africa; Seoul, South Korea; and Aosta Valley, Italy.

Mark Berman is a reporter on the National staff. He anchors Post Nation, a destination for breaking news, developing stories and quick analysis of events around the country.
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