Tuesday, November 27, 2012

More stadium financing follies

I've written about the lunacy of publicly-funded sports arenas and stadia here before, and I think the issue deserves to be revisited given recent developments. On the one front, there is the city of Miami, which was taken to the cleaners by the disgrace that is the Miami Marlins franchise. Unfortunately for that city, their woes may just be beginning, as the Dolphins are also reportedly looking for public funding to fix their dilapidated home.

It would be easy to write this all off as Miami's loss, and theirs alone, except that it's not the case. When municipalities like these go into debt to fund stadium boondoggles, the whole country pays, as a recent Bloomberg article points out.
New York Giants fans will cheer on their team against the Dallas Cowboys at tonight’s National Football League opener in New Jersey. At tax time, they’ll help pay for the opponents’ $1.2 billion home field in Texas. 
That’s because the 80,000-seat Cowboys Stadium was built partly using tax-free borrowing by the City of Arlington. The resulting subsidy comes out of the pockets of every American taxpayer, including Giants fans. The money doesn’t go directly to the Cowboys’ billionaire owner Jerry Jones. Rather, it lowers the cost of financing, giving his team the highest revenue in the NFL and making it the league’s most-valuable franchise. 
“It’s part of the corruption of the federal tax system,” said James Runzheimer, 67, an Arlington lawyer who led opponents of public borrowing for the structure known locally as “Jerry’s World.” “It’s use of government funds to subsidize activity that the private sector can finance on its own.”...
Tax exemptions on interest paid by muni bonds that were issued for sports structures cost the U.S. Treasury $146 million a year, based on data compiled by Bloomberg on 2,700 securities. Over the life of the $17 billion of exempt debt issued to build stadiums since 1986, the last of which matures in 2047, taxpayer subsidies to bondholders will total $4 billion, the data show. 
Those estimates are based on what the Treasury could have collected on interest from the same amount of taxable bonds sold at the same time to investors in the 25 percent income-tax bracket, the rate many government agencies assume. In fact, more than half the owners of tax-exempt bonds pay top rates of at least 30 percent, according to the Congressional Budget Office. So they save even more on their income taxes, a system that U.S. lawmakers of both parties and President Barack Obama have described as inefficient and unfair.
Yes, that's right, when tax-exempt municipal bonds are used to pay for these stadiums, that means that the FEDERAL government is effectively subsidizing these projects. So when the Cowboys build a stadium with "public" funds, that "public" isn't limited to the Dallas area—it includes the entire nation. This amounts to taxation without representation for those of us who don't get to enjoy the Cowboys' new monstrosity, and that used to be something that mattered in this country (but of course, doesn't any more).

Sure, we could try to argue that some of this comes out in the wash, because it's just a transfer from taxpayers to bondholders, and there is significant overlap between those two populations—it's just taxpayers stealing from themselves. But unless every taxpayer is also a municipal bondholder (and I'm at least one taxpayer who owns no munis), then this becomes a very serious constitutional issue, and yet one that is perpetually ignored by nearly everyone in the nation. I, for one, have no interest in paying more in taxes so that Jerry Jones can build a playground for the super-rich in Texas, but I was never afforded a say in the matter.

Ultimately, this trend of public financing of private enterprise must end in all its forms. There's no reason for taxpayers to be funding private business, in Miami, Dallas, or anywhere else. This is a long-running scam that has been run on Americans who love their sports (and teams) too much to say no to this extortion. We all must stand up and say that we are unwilling to pay for stadiums that we then must pay to enter—if it's a public facility, then we should have the right to do with it what we please. Otherwise, the Jerry Joneses of the world can figure out their own ways to build the things. I'm getting out of the stadium-building business... who's coming with me?


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