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Archive for April 1st, 2014|Daily archive page

COUNTERING CORPORATE THREATS: PART ONE (OF TWO)

In Bureaucracy, Business, Entertainment, Law, Politics, Social commentary on April 1, 2014 at 12:15 am

It’s a technique well-known to Mafia extortionists–and corporate CEOs.

“You do —–,” goes the threat, “or I’ll do —–.”

In the case of the Mafia, the threatened action can range from breaking a victim’s legs to murder.

In the case of a corporate CEO, the threatened action usually translates to: “Give us huge tax breaks or we won’t move to your community.”

Or: “Give us more tax breaks or we’ll move out of your community.”

The seeking of “economic incentives” by companies in return for moving to or remaining in cities/states usually means:

  1. allowing employers to ignore existing laws protecting employees from unsafe working conditions;
  2. allowing employers to ignore existing laws protecting the environment;
  3. allowing employers to pay their employees the lowest acceptable wages, in return for the “privilege” of working at these companies; and/or
  4. allowing employers to pay little or no business taxes, at the expense of communities who are required to make up for lost tax revenues.

At least one state has had enough of such behavior–and is prepared to punish it.

Several weeks before the second season of “House of Cards” debued online, its producers sent Maryland Governor Martin O’Malley a threatening letter.

The Netflix series focuses on an unscrupulous politician–played by Kevin Spacey–who manipulates, threatens and even murders to achieve revenge and power.

Kevin Spacey as Frank Underwood

True to the character of that fictitious politician, Frank Underwood, the letter warned: Give us millions more dollars in tax credits, or we will “break down our stage, sets and offices and set up in another state.”

Click here: ‘House of Cards’ threatens to leave if Maryland comes up short on tax credits – The Washington Post

For readers who want to see the specific way this threat was worded:

“We know that the General Assembly is in session, and understand legislation must be introduced to increase the program’s funding.

“MRC [Media Rights Capital] and House of Cards had a wonderful experience over the past two seasons and we want to stay in Maryland.  We are ready to assist in any way possible to help with the passage of the bill.

“In the meantime, I wanted you to know that we are required to look at other states in which to film on the off chance that the legislation does not pass, or does not cover the amount of tax credits for which we would qualify.

“I am sure you can understand that we would not be responsible financiers and a successful production company if we did not have viable options available.

“We wanted you to be aware that while we had planned to begin filming in early spring, we have decided to push back the start date for filming until June to ensure there has been a positive outcome of the legislation.

“In the event sufficient incentives do not become available, we will have to break down our stage, sets and our offices and set up in another state.”

The letter was signed by Charlie Goldstein, senior vice president, television production, for Media Rights Capital, the show’s California-based production company.

Copies were sent to:

  • Dominick Murray, Maryland Department of Business and Economic Development;
  • Hannah Byron, Maryland Department of Business and Economic Development;
  • Jack Gerbes, Maryland Film Office; and
  • Debbie Dorsey, Baltimore Film Office.

A similar threatening letter went to the speaker of the House of Delegates–the state legislature–Michael E. Busch.

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

“This just keeps getting bigger and bigger,” said Delegate Eric G. Luedtke.  Until recently, Luedtke had strongly supported film tax credits.

“And my question,” asked Luedtke, “is: When does it stop?”

“House of Cards” has created nearly 6,000 jobs and pumped more than $250 million into the state economy.

Angered by the threatening tone in the letters, the Maryland House of Delegates issued a threat of its own:

Go ahead and leave.  But if you do, we might use eminent domain to buy, condemn or seize your sets, equipment and other property.

Click here: Maryland pulls an Underwood on ‘House of Cards’ — with vote to seize property if cast leaves state | Fox News

Delegate C. William Frick made the threat on March 27.  It was quickly approved–with almost no debate or even a roll-call vote.

“I literally thought: What is an appropriate Frank Underwood response to a threat like this?” said Frick.  “Eminent domain really struck me as the most dramatic response.”

The amendment states:

“Under certain circumstances” the Department of Business and Economic Development can “exercise certain powers of eminent domain” to acquire the property of a film production company that has claimed more than $10 million in tax credits and then ceased filming in the state.

“House of Cards” is not specifically mentioned in the amendment.

Each year, Maryland earmarks $7.5 million for production companies that film in the state. The producers of “House of Cards” expected to get $15 million for filming Season 3.

“Cards” has already received or expects to receive $26.6 million in tax credits for filming its first two seasons in Maryland.

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