Minnesota Considers Sports Memorabilia and Hotel Tax to Fund Stadium

May 7, 2010

The Fiscal Times reports on tax options for a Minnesota subsidized new Vikings stadium:

State legislators rolled out a plan Monday to pay for a Minnesota Vikings stadium that relies on new taxes on hotel stays, car rentals and jerseys, as well as revenue from a sports-themed lottery game.

That public money would be expected to amount to about two-thirds of a $791 million project, with the Vikings paying the remaining third – about $264 million. The city where it would be built has not been determined.

… The biggest part of the public money would come from a nearly 7 percent tax on jerseys, trading cards and other sports memorabilia, which would bring in an estimated $17 million a year. The 1.5 percent hotel surtax in the seven-county metro area would bring an estimated $8 million, and the sports-themed scratch-off game and rental car tax would each bring in an estimated $5.5 million.

Taxing sports memorabilia and hotels near the stadium is a kind of clever idea to fund the stadium using the “benefit principle” or “user fee” concept, basically charging those who benefit from the service of the stadium to pay for it. But these would be far from perfect user fees.

As former state Rep. Phil Krinkie, president of the Taxpayers League of Minnesota, points out: “People who buy a Twins jersey are going to be paying for a Vikings stadium. You’re asking people who buy a Wild jersey to pay for a Vikings stadium.” Not to mention the unlucky hotel visitors who do not like sports.

Why not just include the tax in the ticket price? Well likely because the tickets would be very very expensive. The bigger issue is whether the Minnesota government should be subsidizing a sports stadium in the first place. They should not. The arguments for subsidizing an arena usually rests on forecasts of economic growth around the stadium area. But promised stadium stimulus is generally unfounded (see this Cato study on “Debunking the Economic Case for D.C. Baseball” and a Tax Foundation op-ed in the Washington Post). Public funding to benefit sports teams is just corporate welfare. And the best type of tax to fund a sports stadium is no tax at all.

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