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Sunday, February 01, 2015

Walker's "Pay Their Way" Jock Tax Is Just Another Gimmick For Special Interests

Not much has been written or challenged about Gov. Scott Walker's so-called proposal to create a "jock tax" on NBA players playing in Milwaukee.

At first blush, his proposal seems somewhat populist in rhetoric, with some even misconstruing it as a new tax on wealthy private interests to pay a larger share for major improvements, such as a new stadium, that they benefit directly from. That would seem like a fair and responsible proposal. Except, that does not appear to be the case at all.

Like most everyone, I haven't seen the details of his plan, but what I can gather from news reports is, it does NOT impose a new or additional tax on NBA players or the Bucks owners. The players will keep on paying the same income tax rates as always. In fact, the players themselves won't even know or feel a difference.

Fox 6 Now Excerpt:
Under Walker’s “Pay Their Way” plan, a Sports and Entertainment District would be created to provide bonding authority to pay back a $220 million grant for a new sports arena. The grant will be in the form of an appropriation bond issuance, paid back by projected growth in income taxes from the Bucks, as well as visiting teams, due to salary increases and new TV contracts. No current base revenues would be used to pay for the bonds, and once the bonds are paid off, the tax growth would return to the state.

Sound a little familiar? It should.

It is exactly the concept used for TIF District financing, but instead of establishing a baseline of tax revenue on unimproved property - Walker is looking to lock-in a baseline of revenue, in dollars, on current state income taxes paid by NBA players.

Just like a TIF District carves out a separate holding account away from general fund purposes on any new tax revenue growth paid above the base, to pay for infrastructure, Walker's proposal does exactly the same with expected new growth in NBA salaries to purportedly pay for the stadium.

With that said, the only people who will be paying more in taxes than they would have otherwise without Walker's "jock tax" will be the taxpayers of Wisconsin. Because just like TIF, it is everyone outside the district (in this case, outside NBA salaries) that will pay the steadily increasing bills of our perpetually shortchanged general fund during the 30 year term of the bond repayment.

So, two truths stand out. One, NBA players, team owners or their shareholders WILL NOT pay one extra penny in taxes to the state to build their own stadium, despite Walker's seemingly populist "Pay Their Way" slogan. Two, contrary to Walker's claim of "protecting state taxpayers," it is state taxpayers who will be losing $220 million in expected revenue growth, revenue carved away from general fund purposes that instead will be used to pay for a special interest new stadium.

Just saying.

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