In Minnesota, state legislators are proposing new taxes they claim will pay for a new stadium for the Minnesota Vikings, but the Tax Foundation says not so fast:
Taxing sports memorabilia and hotels near the stadium is a kind of clever idea to fund the stadium using the “benefit principle” or “user fee” concept, basically charging those who benefit from the service of the stadium to pay for it. But these would be far from perfect user fees.
As former state Rep. Phil Krinkie, president of the Taxpayers League of Minnesota, points out: “People who buy a Twins jersey are going to be paying for a Vikings stadium. You’re asking people who buy a Wild jersey to pay for a Vikings stadium.” Not to mention the unlucky hotel visitors who do not like sports.
Why not just include the tax in the ticket price? Well likely because the tickets would be very very expensive. The bigger issue is whether the Minnesota government should be subsidizing a sports stadium in the first place. They should not. The arguments for subsidizing arena’s usually rest on forecasts of economic growth around the stadium area. But promised stadium stimulus is generally unfounded (see this Cato study on “Debunking the Economic Case for D.C. Baseball” and a Tax Foundation op-ed in the Washington Post). Public funding to benefit sports teams is just corporate welfare. And the best type of tax to fund a sports stadium is no tax at all.
North Dakotans looking for a local example for why this is bad policy should look no further than the Alerus Center in Grand Forks, a topic The Whistler has posted about extensively here on Say Anything. The Alerus was built with the promise that the economic impact from events held at the center would far outweigh the expense to taxpayers of building it and maintaining it. But nothing could be further from the truth.
The economic impact of the Alerus center is minimal, and despite the best efforts of the powers that be in the city (along with the media that’s supposed to be holding them accountable) the facility has been an enormous black hole down which millions of taxpayer dollars have disappeared.
The same would no doubt be true of a new Vikings stadium in Minneapolis.
Really, the situation with subsidies for professional sports emulates the situation with “economic development” policies in general. Big business dangles the possibility of building a new branch of facility in a given community. The dangle the promises of jobs and tax revenue in front of local leaders in exchange for a nice “economic development” package of benefits. These businesses often get several communities competing with one another, then ultimately select the most lavish package.
And if the politicians and/or citizens threaten to take away the cushy benefits, the business threatens to leave. Just as sports teams like the Vikings threaten to leave if they don’t subsidized stadiums, etc.
As far as I’m concerned, businesses should build in a given community because they can be profitable in that community. If they need subsidy, the business shouldn’t be built. Though it’s not hard to imagine why the politicians love being the “king makers” who get to wheel-and-deal with corporate giants and decide who gets taxpayer-funded goodies and who doesn’t.