The IRS Appears to Not Be a Yankees Fan
July 11, 2008
As we have explained many times before, providing subsidies for the construction of sports facilities is poor tax policy (here, here, and here). Specifically, the taxpayer receives few benefits from the millions of dollars required for the construction of a sports stadium. Furthermore, while many individuals tout the jobs created through the construction of the stadium and subsequent economic stimulus created by the stadium, one must wonder if the net job creation in the local community makes up for the cost of the stadium.
The financing plan for both the Yankees’ stadium and Mets’ stadium back in 2006 was part of a plan created by Mayor Michael Bloomberg to employ tax-exempt bonds to fund these projects. The Internal Revenue Service (IRS), subsequent to the signing of plans, has been considering changing the regulations for publicly funded bonds; the IRS wishes to limit profits the Yankees could receive from the additional tax-exempt bond they are requesting. Furthermore, the subcommittee of the House Oversight and Government Reform Committee chaired by Dennis Kucinich is currently questioning the Department of Treasury on a possible change in policy to prevent publicly funded bonds being used for the funding of sports stadiums.
The funding for the new Yankee Stadium appears to be stalled indefinitely. While the Yankees may not be too happy about this, it appears to be a good thing for federal taxpayers.