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Obama Doesn't Want Federal Tax Dollars Paying For Any More Sports Stadiums

His new budget proposes repealing a federal tax exemption that leaves taxpayers footing the bill.
Federal taxpayers are on the hook for nearly $4 billion in costs associated with the construction of new sports stadiums.&nbs
Federal taxpayers are on the hook for nearly $4 billion in costs associated with the construction of new sports stadiums. 

President Barack Obama is trying (again) to take federal taxpayers off the hook for financing new sports stadiums.

In the 2017 budget proposal the White House released Tuesday, Obama proposed repealing a federal tax exemption on the bonds cities and states use to finance new stadiums.

That exemption allows cities and states to pay for stadiums with tax-free bonds that have discounted interest rates, a practice that will cost federal taxpayers nearly $4 billion in tax money on existing stadium debt, according to a 2012 Bloomberg analysis.

Ending that exemption, which the budget would do on bonds issued after the end of 2016, would have a modest fiscal benefit -- it would save roughly $542 million over the next decade, according to the budget proposal.

Economists have also suggested that eliminating the exemption would increase the price of stadiums for cities and states in a way that could, in theory, make them more cost-conscious when they enter into public financing deals. The Treasury Department argues that the repeal could reduce costs for local taxpayers in its explanation of the change, saying that "the current use of tax-exempt governmental bonds to finance sports facilities has shifted more of the costs and risks from the private owners to local residents and taxpayers in general."

What this wouldn't do is totally end the practice of publicly financing stadiums, as cities and states could -- and certainly would -- still use taxpayer funds and access non-exempt bonds to pay for new facilities. But it would amount to a small victory for those who oppose the use of public tax money to build stadiums that primarily benefit wealthy sports owners, in that it at least takes federal taxpayers out of the process.

Obama previously proposed repealing the tax exemption in his 2016 budget, which received little consideration in the Republican-controlled Congress. Obama’s current budget, the last of his presidency, undoubtedly faces a similar fate. 

The current exemption was originally instituted as part of a larger tax reform package in 1986, and was intended to reduce cities’ and states’ incentive to help pay for sports stadiums. Instead, it had the opposite effect, and economists and budget analysts who argue against publicly financed stadiums have long called for its elimination.

“Perfect,” Dennis Zimmerman, a former Congressional Research Service and Congressional Budget Office economist who recommended the exemption’s repeal in 1996, told ThinkProgress when Obama first proposed nixing it last year. "You couldn’t do it any better if you believe like I do that we should not finance these things with tax-exempt debt.”

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