We all want to see the Bucks stay in Milwaukee and the NBA has essentially threatened the city with the ultimatum that Milwaukee must have a new arena by 2017 or we lose our beloved team. So Milwaukee will have a new arena, but paying for the arena with a “Jock Tax” is not the answer.
Like all people who earn income in Wisconsin, professional basketball players, both the Bucks’ players and the visiting team’s players, earn income and pay Wisconsin income tax when they play in Milwaukee. Currently more than $10 million in taxes is collected each year from the professional basketball players, and that money goes into the state’s general fund to pay for items like primary and secondary education throughout the state.
What some people are proposing is that this stream of income that is currently being used for the general welfare of the state residents be diverted to cover the debt service on a $150 million bond that would be used to help finance the new arena. As many conservative economists will quickly point out, there is “no free lunch” and the Jock Tax is not the free lunch that many of its proponents are implying.
First of all, this is not new money. We would be taking the money from the projected revenue for the state and creating a hole in the state budget that would have to be filled by either more taxes on our citizens or more cuts in areas like education.
The response from the Jock Tax proponents would be simply, “You only have this money because the Bucks are in Milwaukee and if they leave you lose that tax money anyway.” That is basically true, but does that argument work only for the Bucks?
If the state decides to take one company or industry and earmark the taxes paid by its employees essentially to build a new place for its employees to work, where does this end? Other Wisconsin companies would make the same argument. What would stop companies that manufacture products sold throughout the world or warehouse goods or manage call centers that could locate in any of our neighboring states from trying the same argument? Instead of a Jock Tax it might be a “Walmart Warehouse Employee Tax” and the Wisconsin taxes paid by these warehouse employees would be segregated and used to service the debt on a new warehouse, for example, under Walmart’s threat of moving operations to Illinois. Now we could have any mobile company—as opposed to one that must stay in an area because it services local residents, like a grocery store—threatening to leave Wisconsin unless their employee’s taxes are used exclusively for their company. We understand that for the past 40 years or more, some companies have continuously threatened to leave the state unless the state gives them various concessions and tax breaks, but now they would have a precedent. If the Bucks can get this special treatment what about my company in Stevens Point or Appleton? Employers could fairly accurately quantify how much their employees are paying in state taxes. They could then demand that the state use that stream of income to cover the debt service for a bond to build a new facility or else they will move out of state. If we set a precedent with this “Jock Tax” we guarantee that there will be greedy businesses using this new trick in their blackmail. Then we residents will have to pay even greater taxes to pay for our children’s schools.
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