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.
“While the credit may produce economic benefits that accrue to certain businesses and individuals, the credit does not pay for itself,” the study reads.
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.
If Maryland decides to extend the credit, however, the study recommends making changes to the incentive program, including requiring film or television projects to file income tax returns to claim their credits, making local governments shoulder some of the costs, or replacing the credits with a grant program.
In 2014, 37 states and Washington, D.C., offered tax incentives for film and television production, according to the study. A jump in the number of states with incentive programs as well as how much money they offer has increased competitiveness and cost among states. Some have decided to double down on incentives while others are backing down. For example, California more than tripled the amount of money it offers this year, while Nevada cut its incentives to pay for credits for electric carmaker Tesla and North Carolina allowed its program to expire.
A hearing on the study was held in Annapolis, Md., on Tuesday, the Baltimore Sun reported.