Let the feds be tax collectors for all

rams stadiumIn the next few years, two of the biggest potential economic developments in the St. Louis metropolitan area may be a new stadium for the St. Louis Rams and a new location for the National Geospatial Intelligence Agency. These are both complicated projects with numerous financial variables. One way to simplify matters, though rarely discussed, is for the federal government to step forward to clarify and equalize tax burdens.

The Rams stadium situation is one that is being repeated across the country, and possibly soon across the ocean to London and beyond. The Rams moved to St. Louis from Los Angeles twenty years ago. St. Louis built a domed stadium for the Rams and gave team ownership the most favorable lease in the league. Now the team argues that the stadium is not in the top 25 percent of stadiums in the league, and under the terms of the contract, they are now free to move elsewhere. Los Angeles, which has been football starved for twenty years, is anxious to have the Rams back. Concurrently, NFL teams in Oakland, CA and San Diego, CA are looking for ways to leave their traditional venues and to also move to LA.

This is the kind of mess where you want “an adult in the room” to appear. As it presently stands, cities are battling against one another for sweetheart deals from each of the municipalities with whom they are negotiating. In order to make new stadiums most feasible, they are looking for the best possible tax breaks in Los Angeles, San Diego, Oakland, and St. Louis.

The adult in the room that is needed is the federal government. It can solve these problems rather easily, but the political will to do so seems miles away. The federal government treats the NFL as some super-sanctified profitable non-profit organization (somewhat akin to the Catholic Church). NFL, Inc. has non-profit status, yet it makes billions of dollars each year. We’re not talking about just the money that the 32 individual franchises make; we’re talking about what the corporate monolith accrues.

What is needed is for the federal government to put the interests of the fans of the franchises ahead of the billionaires who own the teams. This means that the government must set in place rules that forbid communities from bidding for professional football teams, largely on the basis of waiving state and local taxes that most any other business would have to pay. Who can give the most to the Rams, St. Louis or Los Angeles? Who can give the most to the Raiders and Chargers? This question has been asked about storied franchises such as the Miami Dolphins and the New Orleans Saints.

It’s time to stop the madness, and one way to do that is to strip from states and locales the power to levy most taxes. If the federal government had a series of progressive taxes that took the place of the bizarre hodge-podge of state and local taxes that now exist, it could make the system much simpler and much fairer (two values that even Republicans espouse).

Regarding relocation of the National Geospatial Intelligence Agency, four sites in the St. Louis metropolitan area are being considered. One is in Illinois, adjacent to Scott Air Force Base. The land is already owned by the federal government, so the purchase price would be zero. Since the federal government does not tax land, no tax revenue would be lost if the NGIA relocated there.

GeoSpatial-Pruitt-Igoe-aA preferred site for people in St. Louis is in north city, adjacent to the infamous Pruitt-Igoe Housing Project of years past. Much of this land is privately owned and would have to be purchased through  eminent domain. The expected cost to the city would be $8 to $10 million for residential properties and millions more for several businesses located in the area. Even if the city purchases the land and sells it to the federal government at fair market value, the city would still lose all the property tax that it is currently collecting from the area. This again is the kind of problem that would not exist if the federal government had the role of tax collector in our metropolitan areas, meaning that no locale would need to worry about loss of tax revenue if a public development is built.

As feasible as the idea of the federal government as tax collector for all jurisdictions would be, it is not on our political radar.A serious consideration of reforming our taxes in a way that stops localities from cannibalizing one another is indeed a worthwhile goal. It would not help St. Louis and the Rams, nor St. Louis and the NGIA, but it could help us several decades down the road when similar problems occur. As always, keep the dialogue flowing.