The Maryland House of Delegates recently voted to use the threat of eminent domain to force the hit TV show House of Cards to keep filming in the state [HT: Jacob Gershman of the Wall Street Journal]:
Responding to a threat that the “House of Cards” television series may leave Maryland if it doesn’t get more tax credits, the House of Delegates adopted budget language Thursday requiring the state to seize the production company’s property if it stops filming in the state.
Media Rights Capital, the Beverly Hills, Calif., company producing the popular Netflix show, wrote Gov. Martin O’Malley that it was putting off work on its third season until it could be assured that sufficient tax credits would be approved. If those weren’t forthcoming, it said it would break down its film stage and move it to another state.
Del. William Frick, a Montgomery County Democrat, proposed the provision, which orders the state to use the right of eminent domain to buy or condemn the property of any company that has claimed $10 million or more credits against the state income tax. The provision would appear to apply only to the Netflix series, which has gotten the bulk of the state credits.
If the measure passes the state senate, it may well be permissible under the state and federal constitutions as currently interpreted by their respective supreme courts. In cases such as Kelo v. City of New London, the federal Supreme Court (wrongly, in my view) interpreted the Public Use Clause of the Fifth Amendment to allow condemnation for virtually any “public purpose.” The Maryland Court of Appeals has interpreted the Maryland state constitution’s public use clause similarly (though not quite as permissively).
But even if the courts would uphold this taking, it is extremely foolish policy. State governments rarely condemn mobile property, for the very good reason that if they try to do so, the owners can simply take it out of the jurisdiction – a lesson Maryland should have learned when it tried to condemn the Baltimore Colts to keep them from leaving back in 1984. Moreover, other businesses are likely to avoid bringing similar property into the state in the first place.
The state legislature’s frustration about House of Cards threatening to leave unless they get additional targeted tax breaks is understandable. But the solution to that dilemma is simply to abjure special privileges for individual businesses in the first place. Targeted tax breaks and subsidies are rarely effective in promoting regional economic development. The better approach is to have a generally strong business climate for businesses of all types, not favoritism for those that happen to be politically influential or have Hollywood stars lobbying for them. Secure property rights are one important component of such a policy.
It is ironic that House of Cards is lobbying for the same kind of “crony capitalist” favoritism from the Maryland state legislature that is often skewered in the plot of the show itself. But instead of trying to stack the deck by threatening the use of eminent domain, Maryland should simply refuse to play the game in the first place.