Sometimes, all you need to win is a big move that injects enough momentum to reach the finishing line. The Golden State Warriors proved that by bringing in former Oklahoma City Thunder star Kevin Durant to join with Steph Curry to bring home another NBA championship.
Maybe bringing together two senators from vastly different states and from widely different ideologies — U.S. Sen. James Lankford, an Oklahoma Republican, and U.S. Sen. Cory Booker, a New Jersey Democrat — will help inspire a fractious Congress to work together on a bipartisan bill to cut federal subsidies for sports stadiums.
The bill would end the federal tax giveaway for municipal bonds used to fund sports stadiums. It’s a practice that has been going on for decades because shrewd team owners know that local politicians are under extreme political pressure from fans to make sure their beloved local teams don’t move to greener pastures unless they get a handout.
Even if we ignore for a moment that such picking of winners and losers is a flagrant foul by the government, it’s also a questionable use of federal tax dollars. “The federal government is responsible for a lot of important functions, but financing sports stadiums for multi-million dollar franchises is definitely not one of them,” Sen. Lankford said in a statement.
Exempting the interest on municipal bonds from federal income taxes is a legitimate tool to lower the borrowing costs for cities to pay for public projects that serve to carry out core functions of government such as roads, sewer systems, and schools. Subsidizing ballparks for billionaire owners and millionaire players, however, shouldn’t be part of the equation.
The carve-out hasn’t been cheap. According to the Brookings Institution, the stadium loophole has cost federal taxpayers $3.2 billion for 36 professional sports facilities since 2000.
With the federal government $20 trillion in debt, excising this kind of pointless waste would seem to be the legislative equivalent of a slam dunk. But as with so much else in the federal tax code, it pays to be well-connected.
In 1986, when major tax reform was last enacted, there was a push to do away with federal welfare for stadiums. “We thought we shut down public financing to private sports stadiums in 1986,” then-Sen. Byron Dorgan, a North Dakota Democrat told the New York Times a decade later, in reference to a similar measure introduced at that time.
But the subsidy lives on, like the hope that springs eternal in the fans of a team that gets to the championship game, only to see its dreams dashed yet again. (Sorry, Cleveland.)
So, here we are again, decades and billions of dollars later, and Congress is still trying to figure out a way to end this expensive handout.
It’s a matter of simple fairness, according to Sen. Booker, whose home state lost the NBA’s Nets to Brooklyn, where a new stadium was built with $161 million in federal subsidies. “It’s not fair to finance these expensive projects on the backs of taxpayers, especially when wealthy teams end up reaping most of the benefits.” The senator is right. Taxpayer subsidies mean that there are fewer state dollars to go around to address areas of true government need.
Congress should act to remove this misguided incentivizing of federal subsidies for stadium financing. If Washington gets out of the ballpark business, taxpayers will be the big winners.
Erica Jedynak is New Jersey state director of Americans for Prosperity. John Tidwell is AFP’s Oklahoma state director.
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