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CAN WE GET NBA PLAYERS TO DRIVE STOCK CARS?

March 08, 2006

The Tax Policy blog notes how Oklahoma has a tax break for tickets to its refugee NBA team, the New Orleans Hornets.

The obvious and simple question is why should the state of Oklahoma give special tax preferences to professional basketball? By providing this exemption on basketball tickets, while maintaining the sales tax on other goods and services, the state is creating a distortion for consumers, leading to overconsumption of NBA tickets relative to other goods. While this may be the goal of the policy, not only should the question of priorities be asked, but other questions need to be asked as well, like whether or not this will really achieve the goal of keeping the team in Oklahoma and if so, what benefits of a pro basketball team remaining in the state would even exist.

Oklahoma seems smitten with misguided business subsidies, but Iowa has nothing to brag about. Under a law passed last session, the NASCAR track in Newton will get to keep sales tax receipts collected there. All in the name of economic development, of course. And it's to chase a mirage:

One thing is for certain: The empirical evidence is clear that sports teams are constantly over-rated in terms of their economic significance. In nearly all cases, the costs (including opportunity costs) of providing government assistance to professional sports franchies are not worth the benefits.

Yeah, NASCAR isn't technically a sports team, but it's the same idea.

I'm again struck by how clear-eyed the Tax Policy Blog and it's parent, the Tax Foundation, are about the futility of corporate subsidies, while at the same time treating them as a constitutional right, as shown in it's effort to overturn the Cuno decision. The Tax Policy Blog motto: "We're against corproate welfare, but we'll fight for your right to it."

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