Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
When cities crack the professional sports barrier, they can say they have achieved big-league status
May 27, 2001
When cities crack the professional sports barrier, they can say they have achieved big-league status. It's a point of civic pride, and Memphis, already famous for great blues and barbecue, is understandably eager to be the home of a National Basketball Association team.
Unfortunately, too many big cities, including Memphis, float proposals to finance sports arenas that are more reminiscent of backwater hamlets. Like a small-town sheriff aiming his radar gun at unsuspecting travelers, Memphis is set to pick the pockets of out-of-towners and unwary locals.
The sneaky and troubling trend in sports financing, as it expands from city to city, is to try taxing people who have no voice. Eventually, though, nearly everyone is forced to subsidize millionaire athletes and team owners.
Through taxes on hotel, motel and rental car bills, we are reaching a point where the average family can't afford a vacation. Memphis is about to get its piece of the action. The irony, though, is that in trying to put the touch on visitors, Memphis officials may end up fleecing their own.
The most odious part of the plan to build a $250 million basketball arena in downtown Memphis is a proposed surcharge on car rentals. Proponents claim the 2 percent levy would bring in $25 million.
Two percent doesn't sound too bad. But boosters rarely acknowledge this 2 percent would be added to the current 5 percent tax on car rentals.
Worse, this tax may not work the way it is intended. The original plan was to bilk tourists and business people when they rented cars at the airport during visits to Memphis. But the Federal Aviation Administration warned that limiting the tax to airport rentals would be illegal because its revenues would not support airport operations.
No problem, supporters say. Levy the tax throughout the city or county. The problem, though, is that more than half of all cars rented in Memphis are for local residents who need replacement vehicles while theirs are fixed.
Supporters promise the new tax would exempt replacement vehicles that are rented through insurers. But can Memphians feel confident those plans won't change, too, to make the numbers add up?
It's costly enough when we have an accident or expensive car repairs. But soon Memphis folks, like people in other cities with sports franchises, will be asked to pay a basketball tax on top of everything else.
The rental car add-on is not the only disguised tax. City and county residents are told their property taxes will not increase, but hiding behind the billboard for Memphis Light, Gas and Water Division is a revenue trap that will accomplish the same thing. The plan for LG&W to make payments directly for the arena in lieu of paying its own taxes shouldn't obscure the fact taxpayers ultimately will pay.
Every home and business that gets utility service will have to pay more eventually. The only difference between this payment and a property tax is that people get to vote on property taxes, at least indirectly.
A tax is a tax, and Americans pay plenty. And ever since New England patriots (not the football team) dumped tea into Boston Harbor, we have resented being forced to pay taxes without having a voice.
The lure of professional sports is dragging us back to those days. We don't even seem to realize what we're doing to ourselves.
Why tax rental cars and motel rooms rather than dry cleaners or convenience stores? Hardly anyone goes to a ballgame in a rental car, and few people, except the players, stay in a hotel on game night.
The answer, of course, is that those who back the tax figure folks who vote elsewhere will pay it. Profiles in courage, indeed.
If Memphis goes this route to fund its arena, it may join other "big league" cities. But it also will cast its lot with those who seek benefits on the backs of the voiceless. There's nothing big about that.
Copyright © 2001 Memphis Commercial Appeal