MinnPost has a long analysis of the Minneapolis city taxes that will be going toward a new Minnesota Vikings stadium — none of which the city considered to be its money, since it otherwise would have gone to pay for the state-run convention center, but it’s still city taxpayers paying the bills. Mayor R.T. Rybak, notes author Ed Kohler, defended the expense as being made up of “‘Robin Hood’ taxes” that hit the rich the hardest.
In fact, though, 44.5% of the city’s tax money going to the stadium will come from a 0.5% citywide sales tax surcharge, which does precisely the opposite:
The city-wide sales tax is not a Robin Hood tax (sales taxes in general are not since people who have lower incomes spend a larger portion of their income in taxable purchases than those with higher incomes). It hits every purchase from kids buying candy to parents buying toilet paper. Pretty much anything purchased in Minneapolis outside of groceries, clothing, and services purchased will help subsidize the Vikings and Timberwolves.
This is immediately obvious when looking at a pie chart of the city taxes being used for the stadium. Which may be why the city of Minneapolis angled its pie chart to downplay the sales tax piece.
Kohler’s conclusion:
Let’s be clear: This isn’t going to bankrupt the City of Minneapolis. It’s just a matter of priorities on how to best use taxes collected city-wide and in downtown (should collect them at all). Are you willing to believe that there was no better uses for $675 million in tax revenue collected in Minneapolis than to subsidize an NFL team’s stadium and an NBA team’s arena? Me neither.
In related news, the billionaire Koch brothers‘ Americans for Prosperity Minnesota is belatedly taking an interest in the Vikings stadium issue, targeting three state legislators (two of them Republicans) for defeat because they backed the stadium bill, calling it a “give away” to corporate special interests. (MinnPost, for one, has a hard time restraining its giggles at this.) Or maybe just targeting them for defeat because they’re moderate Republicans, and the Koches hate those.
Every thorough economic analysis I’ve ever read (which is admittedly not many) has found that sales taxes hurt the poor less than any other type of tax. I get that a non-thorough analysis might find that sales taxes hammer the poor (theory being that the poor have to spend almost all their money on taxable items while the rich can afford to invest), but the papers I’ve read stated that if you look at the actual long term effect of sales taxes, the poor/lower-middle class in those areas do better with high sales taxes than with any other type of higher tax (property, income, etc.)
Can you cite one of these studies, Ben? I’ve read a fair number of taxation studies, and never heard of this.
Whatever, who cares who pays what and how much it costs? The NFL is just so awesome.
At least with sales tax, everybody has the choice of whether they wish to make the purchase or not and thus pay the tax or not.
Are you kidding me? what part of no new taxes don’t you understand you pretentious son of a gun, the city is paying it with the same tax they used to pay off the Twins stadium so if you didnt have a problem with it in october why is it a problem now that its paying for something else instead of just sitting there, because they were not going to take the tax away in st paul people are still paying a tax that has now fully paid off the xcel energy center, the only new thing is most of it will be paid with a lottery based game, so if you don’t buy a lottery item your not paying for the vikings stadium, and the poor shouldnt buy a lottery item so your whole story is not factual in fact it is something fox news would write twisting the facts around….
Right, it’s “no new taxes” – because it’s an old tax. If it weren’t going to the Vikings it could either be 1) used for something else or 2) eliminated. In fact, it’d have to be, unless the state legislature has some requirement that once the convention center is paid off, the money gets flushed down a toilet.
Sales taxes reduce the incidence on those with more ability to pay. They are quite literally the textbook example of a regressive tax (that hurt the poor). Percentages of income of poor people are spent disproportionately on that sales tax.
You could try to make the point that some other regressive tax is worse but any properly created wealth or income tax would be generally less regressive. You could create a sales tax that only taxed a subset of items (some states avoid taxing food or clothing) but then again the sales tax would be generally regressive. This is not even a rich v. poor thing as the regressivity effects people at pretty narrow bands of income (so marginally better off people will pay less of a share).
One study I read in college (late 90’s), where I was lucky enough to have a USC economics professor who thought that most economists are full of it. There’s no way I’m going to be able to find that one.
The other one was from authors who did a WSJ op-ed a few years back. I’ll look through the WSJ archives and try to find that one a d send you the link, Neil.
Andrew,
If that was parody, then ignore the rest of this post and accept my kudos on a job well done.
If that wasn’t parody, then the only thing I can add to what Neil said is that in every city and through all of human history, the poor have spent a far higher percentage of their wealth on gambling (lottery tickets) and other targets of sin taxes (liquor, cigarettes, sugary drinks [if your populace is full of lunatics], etc.). If you raise those types of taxes, the micro effect is to hammer the poor.
I voted against bringing a lottery to California back in the mid ’80s. I find them a tacky sucker’s bet that the government shouldn’t be involved in at all. I find it inconsistent that governement attempts to control certain behaviors via “sin” taxes/fees and then turns around and promotes an activity [lotteries] that disproportionately negatively impact poorer families.
Also, I don’t believe that poorer people are more effected by property taxes than sales taxes. That doesn’t make intuitive sense to me.
SCJ: I don’t gamble, never did and never could understand the motivation when the odds are stacked against you.
That said, gambling is a vice that people will avail themselves of whether it’s legal or not. So I’d rather have the government involved in some way in running a lottery. The problem is that what they say the money goes toward in some cases changes over time. So who guards the guards? So I’d have no problem with a private company doing it under tight supervision.
It’s very hypocritical to push sin taxes while encouraging gambling via a lottery if you assume a lottery isn’t a sin tax. I think it is.