Barack Obama

Obama Targets Tax Breaks for Publicly Funded Sports Stadiums

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Courtesy of Alan Vanneman (read his blog here), comes word about a President Obama initiative that all libertarians can get behind: ending the use of governmentally issued tax-exempt bonds for sports stadiums and related forms of corporate welfare. From Politico:

Under current law, governments can use the proceeds from tax-exempt bonds for private activities, such stadium projects, unless more than 10 percent of the debt service comes from a private business, and more than 10 percent of the use of the facility is attributed to a private interest. Both have to be true for the exemption to be denied.

As part of its fiscal 2016 budget request, the Obama administration is proposing to change this dual test for sports facilities by focusing the exemption only on the question of how much the facility is used by a private interest.

"By removing the private payment test, tax-exempt governmental bond financing of sports facilities for professional sports teams would be eliminated," according to the budget.

Closing this loophole will not raise a lot of tax dollars—the White House estimates it will net just $542 million over the next decade—but the principle behind is certainly worth defending.

Local, county, and state governments routinely issue tax-exempt bonds for which residents are on the hook. When it comes to stadiums and other sorts of venues (including in many cases convention centers), these are undisguised handouts to connected businesses. It's sort of the flipside of eminent-domain abuse, when governments seize a property and then turn it over to private interests.

Politico underscores its story with a troubling tale of Wisconsin Gov. Scott Walker, who has recently broken in the top tier of Republican pols vying for the 2016 presidential nod. Walker is pushing to issue over $220 million in state-backed bonds to build a new arena for the NBA Bucks, who have threatened to leave Milwaukee otherwise. To their credit, small-government people in Wisconsin who stuck by Walker during his recall election are apoplectic at his plan. That includes the local chapter of Americans for Prosperity, the Koch Bros. affiliated group that pushes for smaller government.

Read more here.

In honor of the Super Bowl, Reason TV celebrated "The NFL's Top 5 Hits…on Taxpayers."

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  1. Walker is pushing to issue over $220 million in state-backed bonds to build a new arena for the NBA Bucks, who have threatened to leave Milwaukee otherwise.

    Would anyone really care if the Bucks left Milwaukee? I mean, didn’t the Bucks trade away Kareem to the Lakers to make room for Kent Benson? Really? Kent Benson? The franchise is a fucking joke. Wisconsin still has the Packers, and better basketball with the Badgers (who wrecked Indiana last night).

    Oh and Scott Walker can suck it, too. The GOP will get a nasty wake up call some day, and it will be because of clowns like Walker, Bush, Christie, and their ilk.

  2. Courtesy of Alan Vanneman (read his blog here)

    No.

    1. They misspelled his name.

    2. Yeah. You better stick with wingnut.com to reinforce your existing belief system.

      1. Something tells me you’d probably categorize Vanneman as a “wingnut”, along with the rest of the mindless rabble not writing for the intellectual powerhouses you frequent like Salon or Kos.

        But who can pass up a good talking point, right?

        1. I am an unapologetic anti-war small government capitalist secularist.

          I don’t have a party. I voted Obama 2008 like many of my stripe did. I voted Reagan in 1984 and would again vs a Mondale. I voted Gary Johnson in 2012.

          I will vote the same in 2016. I will not vote for a theocrat.

          1. How’s life at Bloomberg News, aka JournoList Siberia?

            Getting canned by Welch is one thing, but you should admit once and for all that you’re the world’s stupidest douchebag for somehow getting a plum gig at the Washington Post that you didn’t deserve, and then flushing it down the toilet by being the detestable, lying, manic-depressive sociopath that you are.

            1. That gag of yours was never funny.

              1. And you think your fake persona and your lies are funny? Only to you, dickhead.

          2. “I am an unapologetic anti-war small government capitalist secularist.”

            You misspelled demfag.

  3. It might seem gauche to raise a crass concern like states’ rights, but how can the federal government tell states how they may and may not issue bonds?

    Not that it isn’t a worthy proposal, but it seems like the kind of thing that should be undertaken at the state level.

    1. Well, this has more to do with the tax exempt status. States have been on various spending sprees of late because they can easily issue all these bonds, the profits from which are not federally taxed. So while I agree that states should have the right to make their own stupid decisions, the Federal government should not be subsidizing these decisions by incentivizing investors with higher returns.

      1. Ahh, gotcha. That makes sense. Should have paid closer attention to the article.

      2. the Federal government should not be subsidizing these decisions by incentivizing investors with higher returns.

        The exemption doesn’t incentivize investors with higher returns. Tax-exempt bonds pay a lower interest rate to compensate. It incentivizes them to accept a lower interest rate so that they get the same after-tax return. (This is also why it’s a bad idea to invest in muni bonds unless you’re in the highest marginal tax bracket, since the rate decrease is generally what would cause it to reach equilibrium for the highest bracket.) Tax-exempt municipal bonds are a subsidy to the local governments by allowing them to issue bonds at lower interest rates.

  4. That includes the local chapter of Americans for Prosperity, the Koch Bros. affiliated group that pushes for smaller government.

    I guess this means leftists are now on board with tossing cash at billionaires for more sports stadiums.

    1. Actually, they’ve long been on board with that, at least in places where I’ve lived. Never mind how many of their stated principles they contradict in the process; their revealed principles have thick coatings of doublethink.

    2. I guess it also means that the Republicans aren’t in the pockets of the Koch Brothers as I’ve been told.

      1. Depends on which ones. In Minnesota it was most of the IRs against the stadium deal and the DFLers pushing for it. In North Carolina the GOP governor (and once speaker, now Senator) vetoing stadium subsidies, though then the city of Charlotte went and did its own locally.

  5. It should be easy enough to keep a single pro team’s use of a facility to under 10%.

    I’m thinking about the NYC Parks Dept. field we use in Pelham Bay Park for the Warrior Football Club. We use it all we want for practice & games, but the amount of time we’re on it surely amounts to only a small percentage of the time it’s available for use by anybody who gets the permit. We do have an equipment shed we occupy completely; I don’t know how that’s arranged. Anyway, in our case of course it’s not our operation to which the field owes its existence & maintenance, but I could easily imagine a stadium’s being built for which the excuse was a single pro team’s use, but which could similarly be kept under 10%. So I don’t think this is a difficult requirement to get around. In fact, the debt service criterion would’ve been a far more stringent one to keep, assuming the pro team was the real $ maker.

  6. Closing this loophole will not raise a lot of tax dollars?the White House estimates it will net just $542 million over the next decade?but the principle behind is certainly worth defending.

    The principle that not stealing (aka not taxing) from some people, but stealing from others, should be remedied by stealing from everyone?

    Here’s one libertarian that doesn’t agree with you. How about advocating getting rid of such a tax for everyone instead?

    1. Just like you proudly defend the Post Office’s exemption from tax, I’m sure, arguing that we can’t possibly make the Post Office pay any taxes of any sort unless we eliminate all taxes. Next you’ll cheer on a proposal to exempt only government employees from income tax (as Gray Davis actually proposed briefly in California.)

      This is a pure subsidy for government spending (borrowers don’t make any more, since it just lowers the interest rate) relative to private use.

  7. Yeah, libertarians are all about raising taxes. Gillispie, is this a joke?

    1. But he doesn’t like sports. Especially popular ones. So it’s OK.

    2. The lower taxes for the owner of the bond is entirely negated by the lower interest rate offered to the person who buys the bond. It’s nothing but a subsidy for government spending.

  8. A city isn’t truly a major city unless it gets a full complement of major-league teams by any means necessary. Just ask the folks in Los Angeles.

    1. They’re too busy working on their tans to pay attention to sports.

    2. Los Angeles? You mean West Bumblefuck, that podunk rest stop with the same number of NFL teams as Des Moines?

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