A-List Entertainers, D-List Tax Policy
October 15, 2015
New Jersey’s legislature is no stranger to offering tax incentives in an increasingly Sisyphean effort to revitalize the beleaguered Atlantic City economy. We previously noted how Revel, the city’s now defunct mega-resort/casino, was the recipient of $261.4 million dollars in tax credits from the Christie administration. The state’s experience with Revel should have cautioned legislators against targeted tax breaks for favored industries and groups. Unfortunately, a New Jersey state Senate committee approved a new tax break targeted toward entertainers, called the “Britney Bill,” after pop star Britney Spears. The bill is expected to be reviewed by the state’s Senate Budget and Appropriations Committee.
The “Britney Bill” would exempt “A-list entertainers” from New Jersey state income tax on their performances in New Jersey if they play at least four shows in Atlantic City. In addition to Atlantic City, New Jersey boasts popular concert destinations such as Camden, East Rutherford, Newark, and Holmdel, income from which would be exempted if at least four concerts were performed in Atlantic City itself.
Supporters of the bill have claimed that artist residences in Las Vegas have generated positive economic impacts and highlighted Atlantic City’s own experiences with star entertainment. Atlantic City’s free beach concert featuring Lady Antebellum and Blake Shelton drew more than 120,000 people during the summer of 2014. Last summer’s ticketed Maroon 5 and Rascal Flatts beach performances drew nearly 100,000 concertgoers.
Casino revenues have been plummeting in New Jersey for almost a decade as more states have legalized gambling, so it is unsurprising that legislators would contemplate new efforts to draw additional tourists to Atlantic City. But there is no evidence that this bill will accomplish this. We have cited research illustrating how such tax breaks are grossly distortive and inefficient. Entertainers already frequently play shows in New Jersey because there is a large and supportive audience for music there. Instead of encouraging artists to play more shows in the state, it is likely that this tax break will go to artists who would have played shows there anyway. In effect, the “Britney Bill” will reduce tax revenues without providing any long-lasting benefits to the economy.
Atlantic City should focus on providing broad-based tax reform for its residents. Property owners have seen their property taxes increase by more than 50 percent in the past two years. Targeted tax breaks will not reverse the rise in the city’s high unemployment rate or generate long term growth. Legislators should focus on meaningful tax reform, not gimmicks.