In yesterday's House hearing, the Treasury Inspector-General was asked if he could list which organizations had been targeted by the IRS for delayed approval or harassing questions. He replied that he could not make that...
- Chicago Tribune Quotes Mark Robyn on Stadium Tax Credits
Chicago Tribune Quotes Mark Robyn on Stadium Tax Credits
By Phil Rosenthal
The dust-up over Joe Ricketts' consideration — and rejection — of a proposal to help fund an anti-President Barack Obama ad campaign has spotlighted a nagging contradiction related to the family's ownership of the Cubs:
Here's a staunch billionaire opponent of free-spending government whose family seeks government help funding renovations for Wrigley Field, which inevitably would boost the profitability of their private business venture.
"You're hitting on an important point," said Mark Robyn, an economist with the Tax Foundation. "Often ... tax incentives are seen as different than government spending. They are different in a couple key ways, especially legally, but in fact the economic effects can be very similar. … It's not like these things are free. Nothing is free."
Whether the government hands out cash, tax breaks or another benefit, there's less in the coffers to balance the budget.
Wrote Jonathan S. Tobin, the senior online editor of Commentary on the neo-conservative magazine's website, the Rickettses' "hypocrisy comes from their desire for public subsidies for their baseball operation while opposing the president's support for high taxes and unlimited government spending.
"The sorry truth," Tobin noted, "is that almost all of the millionaires and billionaires who own sports teams in this country are ardent capitalists when it comes to taxing their incomes but devout socialists when it comes to getting government to subsidize their business."
Yes. What he said.
First off, let's recognize the Cubs for what they are. They are a sports team, a brand, a business, a civic institution. But in this context think of the Cubs as a family trust, a tax-efficient structure for protecting and eventually distributing wealth.
Thomas Brennan, an associate professor of law at Northwestern University and of finance at the Kellogg School of Management, said that one of the benefits a family trust affords the wealthy is that it enables the sharing of assets with future heirs while reducing exposure to probate and minimizing the impact of estate taxes.
Without knowing the specifics of the Cubs' ownership structure, Brennan said that "broadly speaking, a common thing to pass wealth to future generations is to pass the assets while they have a lower value and have that crystallize as the amount at which they'll be taxed for estate and gift tax purposes, then (hope) the value grows thereafter."
So although Tom Ricketts led the effort of family members to buy into the baseball franchise and related properties, it also should enable Joe Ricketts — even with no operational role — to transfer funds across generations through an asset that stands to grow if properly managed.
Joe Ricketts, the billionaire founder of TD Ameritrade, made it clear to an Omaha audience in 2010 that the purchase of the Cubs from Chicago Tribune parent Tribune Co. involved his money, and he insisted that son Tom manage it as a full-time job. Dennis Culloton, a spokesman for Tom Ricketts and the Cubs ownership group, doesn't disagree.
"Tom led the process," Culloton said. "He persuaded his family members to make (the Cubs) the next family project, using the resources you're discussing. He very well could have decided to invest in a different kind of business, which could very well have qualified for EDGE tech credits or some other program to promote employment or tax revenue growth, and maybe not as much would be discussed about that."
Culloton wants everyone to know there's no formal proposal for public assistance before lawmakers at the moment to fund a Wrigley rehab, but any plan would be primarily financed privately. "There's a lot of room for philosophical and academic debate, and I guess that's all it is at this point," he said.
"It's a little more complicated than positing the theory that since you're against a certain kind of spending in Washington, you're against any sort of private/public partnership," Culloton said. "First of all, it's Joe's separate political activity. It's not Tom's position. It's not the Chicago Cubs' position. No. 2, the whole discussion is about what's the best way to partner and try to keep a terrific thing going, in terms of tourism and economic development."
Still, asking a cash-strapped local and/or state government to help the Cubs would seem counter to the tenets of the elder Ricketts, who has said he considers it "a crime for our elected officials to borrow money today to spend money today and push the repayment of that loan out into the future on people who aren't even born yet."
Brian Baker, president of Ending Spending, a group Joe Ricketts founded, responded to the apparent contradiction in a statement that his organization "is against wasteful spending, not against all spending and certainly not against state and local plans that create jobs and economic growth."
But the Chicago Cubs, like so many sports franchises, already enjoy plenty of subsidies, from generous depreciation allowances to being beneficiary of tax breaks on suite rentals.
Rodney Fort, a sports economist at the University of Michigan, says incentives can be justified, but there is a limit. It's also easy to find hypocrisy, if you're looking for it.
"I work at a public institution," Fort said. "It wouldn't take me long to wander around the university and find someone who was staunchly anti-subsidy even though where they work … is subsidized."
When it comes to the Cubs, either you separate Joe Ricketts' beliefs from what the team is seeking, or you trip over the contradictions.
Call 'em as you see 'em.
Last week, I had a lively debate with Jared Bernstein of the Center on Budget and Policy Priorities on the future of North Carolina tax reform....
Errata: A previous version of this report erroneously listed 2009 information instead of 2013 information. We regret the error.
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