Just cut taxes, everything will be better
The Patriots may have won Super Bowl XILX, but by far, the biggest loser is not the Seahawks, but the host city, Glendale, Arizona, a suburb of Phoenix.
Jerry Weiers, Glendale’s mayor, said in the weeks leading up to the game that he didn’t think Glendale would make money on the deal. And, judging by history, he will likely be proven correct. The data shows that Super Bowls are money losers for their hosts. Sure, they bring in enormous numbers of tourists, but that usually just crowds out other tourism. In order to get the major event, cities grant numerous tax concessions. Glendale hosted Super Bowl in 2008, and Mayor Weiers and Phoenix Cardinal owner Michael Bidwill had a heated public exchange. Weiers complained Glendale lost a million dollars on the event, and Bidwill accused the city of not doing enough to make the NFL happy!
Super Bowls and Olympic Games consistently lose money for their hosts. And professional sports teams get sweetheart deals to build new sports stadiums. The St. Louis Rams are threatening to move back to Los Angeles, and St. Louis taxpayers will no doubt pay through their gold and blue noses to keep them. This game of musical franchises occurs whenever a billionaire owner decides he wants more of what another billionaire owner has on the taxpayer’s dime. Unfortunately, there are usually enough politicians ready to oblige him.
The states are in competition with each other to bring in businesses. Their general business climate may not be the most favorable. They try to land the big corporate fish with lures of tax breaks and other special concessions. But that leaves their legacy businesses and taxpayers high and dry.
Las Vegas City Councilman Bob Beers led an effort to stop the construction of a new soccer stadium in downtown Las Vegas last summer unless it was privately funded. The Beers insurgents narrowly lost in the end last December, and Las Vegas is on the hook for about a third of the construction costs. But their tough opposition meant the city’s liability was at least decreased.
When Gov. Brian Sandoval successfully got Tesla to locate its battery factory in Northern Nevada, it helped offset the tax concessions by reducing the Motion Picture Tax Credit it had recently granted for filming in our scenic state. There are some Las Vegas legislators who would like to see it restored. Our new Tesla agreement at least involves the creation of a factory with jobs attached in Reno. The motion picture tax credit does not obligate any significant infrastructure investments by the Hollywood moguls in Nevada. Many states are eliminating or reducing their motion picture tax incentives, and Nevada should join them.
The anti-crony capitalism model is the Texas model—lower the tax rates and regulatory burdens for everyone, and companies will move in on their own dime. North Carolina is another good example. New York State is trying to revitalize its depressed upstate economy by offering tax breaks. You’ve no doubt seen the TV ads. But what happens when the tax credits run out? Corporations—even Tesla—could pull up stakes and leave the local conditions as bad as when they arrived. North Carolina has simply created a low tax, small regulation overall business environment. The result is that businesses are fleeing the “New New York” for the booming Tar Heel state just as Texas is hauling in a business bounty from Californians desperate to escape that PC mess. This is the correct model for Nevada—low taxes, more freedom resulting in economic growth for everyone.