Pass the smelling salts: Obama gets one right about taxes

Workers continue construction of the new Falcons stadium, March 2015. (Photo: David Tulis)

Workers continue construction of the new Falcons stadium, March 2015. (Photo: David Tulis)

Workers continue construction of the new Falcons stadium, March 2015. (Photo: David Tulis)

Don’t ever say I disagreed with everything Barack Obama did as president (from USA Today):

“If President Obama has his way, the nation’s taxpayers would not help finance a new arena proposed for the Milwaukee Bucks professional basketball team.

“Nor would taxpayer-financed, tax-free bonds be used to help finance a new stadium being discussed in St. Louis for the NFL Rams, or in Oakland for a new complex aimed at keeping the area’s professional football, baseball and basketball franchises from leaving town.

“An obscure item in the president’s new budget would put an end to the long-standing practice of states and cities using tax-exempt bonds to finance professional sports arenas, a practice that costs the U.S. Treasury $146 million, according to a 2012 Bloomberg analysis.”

Now, do I think it’s a little … odd that such a proposal would come late in Obama’s term and right when a leading GOP contender for president (Wisconsin Gov. Scott Walker) is pushing for a stadium-financing deal in his home state? Maybe. And do I wish this provision had been proposed and passed into law, say, three years ago so that it preceded the Falcons and Braves stadium deals? Absolutely.

That said, public subsidies for sports stadiums are an egregious practice of funneling precious tax dollars to billionaire team owners who employ millionaire athletes. A Bloomberg analysis from three years ago put the total federal tax subsidy at $4 billion over a number of decades, and that’s just a fraction of the cost to taxpayers. In metro Atlanta alone, bond payments for the new Falcons and Braves stadiums will consume more than $1 billion in tax revenues over the next 30 years.

The political debate in this country tends toward an argument about how much to take from “the rich” upfront in the way of taxes on their earnings. It’d be much more productive to look for ways to stop giving them tax dollars on the back end through these sorts of subsidies, and I’d like to see Congress take up this particular provision from Obama’s budget.

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59 comments
Wascatlady
Wascatlady

Same thing in Georgia?  Not on your life!

SGAMOD
SGAMOD

finally something I can agree with you on Wingfield!!!

MHSmith
MHSmith

It's the spending. It always is. Even in the late 1990s, we had surpluses because spending fell below 19% of GDP for the first time since 1974.


It's that old spending problem again, huh? 

Who wudda thunk it!


Tell you what I'd really like to know Kyle, is where do we as Americans place our top THREE (and just the top three) national spending priorities. 

The spending problem is one more of setting our priorities where we want them set and what we are willing to spend to have those top three items in the satisfactory amounts. 

Since the Republicans have a budget in the offering what you brought up here about spending being the problem is bound to reemerge in the blog chattering.

Hedley_Lammar
Hedley_Lammar

@Kyle_Wingfield @MHSmith 

That budget isn't going anywhere



Like previous Republican budgets, Price's plan contains no tax increases. It assumes Congress will enact revenue-neutral reforms to the tax code to reduce rates while ending many tax breaks. But it leaves the details for later.


Price said tax reform and other proposals, including a roll-back of financial regulations enacted in 2010, would unleash stronger economic growth that will help slash deficits by more than $1 trillion through 2025.


Starik
Starik

Not surprising. Dubya got one right on immigration.

RafeHollister
RafeHollister

@Starik So, you think it is a good idea, that 20% of all jobs created since the nineties are filled by immigrants, legal and illegal.  Yet,  Americans are still out there looking for a job.

Hedley_Lammar
Hedley_Lammar

@RafeHollister @Starik So, you think it is a good idea, that 20% of all jobs created since the nineties are filled by immigrants, legal and illegal.


Yes


Americans wouldn't do those jobs anyway. I have a feeling your numbers aren't accurate either. 

332-206
332-206

In addition to tax breaks for NFL stadiums, may we question why the NFL itself is a tax exempt organization?

RafeHollister
RafeHollister

Yeah Obama, whatta you know, even a blind squirrel finds an occasional acorn.


I agree with the proggies on this as well, government needs to get out of the business of subsidizing corporations and supposedly "non profits".  If these initiatives are not financially feasible without government assistance, then let them mold away.   The sports cabal has long influenced the low info crowd into believing that their enterprises substantially move the economy, when the opposite is true.  A Super Bowl never brings in anywhere near what they claim and a sports team in a city, produces modest returns on investment. 

straker
straker

Kyle


I mean how many Republicans will support NOT giving them these subsidies.

MarkVV
MarkVV

Another Kyle’s column that should be applauded, if it were not for his turning the issue in the title exactly on its head: It certainly does not require any smelling salts when President Obama does something that does not support the millionaires; they might be needed when a conservative agrees with him in that.

LilBarryBailout
LilBarryBailout

@MarkVV

The surprise is that your guy did something that wasn't un-American, un-democratic, or just plain stupid.

notagain
notagain

NJ Gov. Christie's tax breaks reward political insiders NJ Gov. Christie's Camden tax breaks reward political insiders over city itself.

Makes one curious why our elected visited him,and welcomed him.

Gov.of,for and buy the rich people.

McCarthy30307
McCarthy30307

Taxing capital gains as ordinary income would be a good place to start.

Visual_Cortex
Visual_Cortex

@LilBarryBailout @McCarthy30307

If that caused tax revenue to fall

It won't. People won't stop investing just because they'd be expected to pay the Little People's income tax rates on their no-longer special kind of income.

Hedley_Lammar
Hedley_Lammar

@Visual_Cortex @LilBarryBailout @McCarthy30307 Exactly right


Warren Buffet had a great quote on this.


"Suppose that an investor you admire and trust comes to you with an investment idea," Buffett wrote in an opinion article Monday in the New York Times. " 'This is a good one,' he says enthusiastically. 'I'm in it, and I think you should be, too.' "


"Would your reply possibly be this? 'Well, it all depends on what my tax rate will be on the gain you're saying we're going to make,' " Buffett continued. " 'If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1%.' "

Kyle_Wingfield
Kyle_Wingfield moderator

@HeadleyLamar As for this: "In the 50's the top bracket was 90 percent"

And tax receipts during that decade averaged 16.7% of GDP.

In the 2000s, despite the Bush tax cuts of 2001 and 2003 and the bottom falling out of the economy in 2008, tax receipts averaged 17.1% of GDP.

Why did we run surpluses a few times in the 1950s? Because spending averaged 17.1% of GDP -- pretty close to revenues. In the 2000s, spending averaged 19.4% of GDP.

It's the spending. It always is. Even in the late 1990s, we had surpluses because spending fell below 19% of GDP for the first time since 1974.

Kyle_Wingfield
Kyle_Wingfield moderator

@HeadleyLamar "We had no debt."

LOLOLOLOLOLOLOLOLOLOLOLOLOL

Do you really believe that? Or do you simply not know the difference between "debt" and "deficit"? Or between "deficit" and "surplus," for that matter (since we did run deficits during much of the 1950s)?


Kyle_Wingfield
Kyle_Wingfield moderator

@Jefferson1776 Right, that's why it's a pattern that has played out more often than not over the history of that tax.

Kyle_Wingfield
Kyle_Wingfield moderator

@HeadleyLamar "No it hasnt"

I know you're as faithful to data as you are to punctuation, but here are the facts for those who actually pay attention to them.

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?DocID=161&Topic2id=30&Topic3id=39

If you look at periods of time a) with the same tax rate, or b) when the rate was falling or rising year over year before leveling out, you will see a pattern in terms of capital-gains tax receipts as a percentage of GDP. I have ranked those periods from lowest tax rate to highest:

1. 2004-09 -- tax rate was 15.35-16.05%, receipts averaged 4.6% of GDP

2. 1998-03 -- tax rate was 21.05-21.19%, receipts averaged 4.4% of GDP

3. 1982-86 -- tax rate was 20%, receipts averaged 4.25% of GDP

4. 1954-67 -- tax rate was 25%, receipts averaged 2.45% of GDP

5. 1979-81, 87-90 -- tax rate was 28%, receipts averaged 2.77% of GDP

6. 1991-97 -- tax rate was 28.93-29.19%, receipts averaged 2.63% of GDP

7. 1968-71 -- tax rate was 26.9-34.25%, receipts averaged 2.91% of GDP

8. 1972-75 -- tax rate was 36.5%, receipts averaged 2.35% of GDP

9. 1976-78 -- tax rate was 39.875%, receipts averaged 2.2% of GDP

So, as you can see, with only two exceptions, receipts were larger when the tax rate was lower. The three best periods of time for receipts were the three periods of time with the lowest tax rate; the two worst periods of time for receipts were the two periods of time with the highest tax rate.

The truth is, folks like you subscribe to the Obama notion of raising taxes on the rich out of "fairness," even if it means reducing tax revenues.


Hedley_Lammar
Hedley_Lammar

@RafeHollister @Kyle_Wingfield @HeadleyLamar This from a guy who believes in dowsing.


Any argument that tax cuts (especially on the wealthiest Americans) increases revenues simply ignores the facts and misunderstands human nature.  The wealthiest Americans will invest as long as they expect a return on their investment.  This means their main concern is the health of the economy (demand, interest rates, the market, etc).  In fact, one can even argue that higher tax rates encourage more investment and production in order to offset taxed earnings.


In times of economic growth, the wealthiest Americans (and for that matter, corporations) will invest.  In times of economic downturn, both will, in general, hold onto their money, no matter how low taxes are.  Any argument that the Reagan of Bush tax cuts increased revenues of GDP growth is nothing more than a selective play on the facts.


Lowering taxes does NOT increase revenue. Period.



http://www.factandmyth.com/taxes/tax-decreases-do-not-increase-revenue


Kyle_Wingfield
Kyle_Wingfield moderator

@HeadleyLamar Now you're moving the goal posts. We were talking about capital-gains taxes specifically.

straker
straker

"using tax exempt bonds to finance professional sports arenas"


Let's see how many Republican politicians will support this.


I'm guessing few if any.

Kyle_Wingfield
Kyle_Wingfield moderator

@straker Stadium subsidies are a pretty bipartisan thing. In fact, they're a great example of why just because something is "bipartisan," that doesn't necessarily mean it's a good thing.

LilBarryBailout
LilBarryBailout

Interesting post.  I had no idea that state or local decisions had an impact on federal taxes.  Let's hope this can get fixed.

MHSmith
MHSmith

You nailed this one Kyle!

DawgDadII
DawgDadII

“An obscure item in the president’s new budget would put an end to the long-standing practice of states and cities using tax-exempt bonds to finance professional sports arenas, a practice that costs the U.S. Treasury $146 million, according to a 2012 Bloomberg analysis.”


Kyle, generally speaking I'm on your side in this argument, but PLEASE explain how this qualifies as "funneling precious tax dollars to billionaire team owners"? AVOIDING taxation is NOT the same thing as TAKING funds from the Treasury, otherwise we all need to confess and pay up (enslave ourselves). It's not fair to assume the stadiums in question would be built without these bonds, especially in St. Louis; thus there is no net revenue deprived from the USG in these transactions.

Kyle_Wingfield
Kyle_Wingfield moderator

@DawgDadII That's a fair criticism. It would have been better to say public subsidies give a financial break to those owners.

Jefferson1776
Jefferson1776

Cobb Co, have those republicans bought anymore stadiums for billionaires lately ?

styymy
styymy

Kyle the reason its come so late in the President's term is because all of the blockage and filibustering the Republicans have turned into an INSTITUTION the past 7 years. Stammering and holding just about everything up has is status quo on Capital Hill these days. 


If you think this is the only thing that's going to pop up toward the end of his term, you should get ready for the deluge. You say this his one he got right...isn't it just too bad so much time has been wasted keeping the President from even trying to do anything...anything at all, that might just turn out to be right??