Monday, November 19, 2007

Badger tax exemption is fiscally irresponsible!

Guest Editorial

by Chuck Gobel

In a stunning display of bipartisanship, on October 30, ten Republican assembly persons were joined by four Democrat assembly persons to introduce AB 559.

In an equally stunning display of legislative efficiency, on November 14, seven Republican members of the Ways and Means Committee were joined by six Democrat members of the Ways and Means Committee and voted unanimously in favor of the bill and to move the bill to the entire Assembly.

The fiscal note on the bill, which arrived on November 6, indicates that passage of the bill would decrease revenue at both the state and local level. What does this bill do to inspire such swift action in a state that is so strapped for cash at both the state and local level?

Here’s the answer: “Alvarez wants tax exemption” (MJS, November 15, 2007, p7C) The exemption sought is for donations made for preferential treatment to obtain tickets for sporting events. Currently the major universities (UW, UW-M, Marquette, and UW-Green Bay) demand such a donation. According to the article, “The right to purchase is an amount paid to a school or institution in excess of the face value of a season ticket.” (Note: Unbelievably, apparently, the Green Bay Packers already have been granted this exemption.)

This is not a donation! If anyone is confused as to whether this demand is a donation or the ticket price, try to get the ticket without the donation.

This ‘donation’ is the price of the ticket, and as such should be taxed in the same manner as any other ticket is taxed. (Under the bill, the amount that would be a direct sales tax becomes an income and franchise tax credit equal to the sales tax. And just to sweeten the deal, if the credit exceeds the tax liability, the excess can be carried over to a future year.

Why should we, as citizens who pay sales taxes on hosts of things we purchase and need everyday, be concerned?

In addition to the equity issue, which is huge, there is the financial issue. As reported in the MJS article, Alvarez and Vince Sweeney, senior associate athletic director, said if the Department of Revenue were to start collecting the tax on this “donation”, the Athletic Department would owe $400,000 in the first year. Moreover they said if the tax were collected retroactively to 2001 the department would owe up to $2 million dollars. Whoa! Six years of avoiding tax payments! Scofflaws take heart!

Undoubtedly, with the bipartisan support in the Assembly and a Republican and a Democrat sponsor in the Senate, AB 559 is, as the saying goes, “good to go!”

The governor, when it reaches him, should just put AB 559 in his pocket and let it die a quiet and well deserved death.


Anonymous said...

We also ought to be concerned because of the talk of raising the state sales tax. That's what happens when some who owe don't pay.

The rest of us will have to pay more.

Anonymous said...

Chuck, you are far, far off the mark here.

In 2005, the Department of Revenue re-interpreted state law to impose sales tax on the license fees. It hasn't enforced the interpretation pending action by the legislature.

Wisconsin and Marquette (the only schools which use this fund-raising method) have surveyed their peer institutions around the country which also use seat license fees. Guess what? No other state imposes the sales tax on seat license fees!

When the Packers decided to use seat license fees, the legislature gave the Packers a special exemption to make it clear that no sales tax would be applied.

Let's consider one other element concerning Lambeau Field and Miller Park: each was constructed or re-built using local sales tax revenue. If you spend a dollar in Milwaukee County (plus five others) or Brown County, you are paying for Lambeau Field or Miller Park whether you want to or not.

Did UW beg the legislature for sales tax revenue when it built the Kohl Center ($80 million) or when it re-build Camp Randall ($109 million)?

No, it did not -- it found individual donors who wrote large checks and also created the seat license fee system.

The seat license plan covers just 38,000 seats at Camp Randall (82,000 capacity) and around 10,000 (of 17,000) seats in the Kohl Center. Accordingly, it isn't necessary to pay the license fee to be a season ticket holder.

You should be applauding UW for putting up around $200 million in these two projects without sucking off the taxpayers!

Face it: your opinion is wrong -- DEAD WRONG!

Anonymous said...

Rational Observer, we know that's you as Anonymous II.

Your statements were rebutted, proved wrong, on another blog. Once you were rebutted there, you moved here. Nice. But for others who may want to see where he's wrong, see Boots and Sabers' comments thread on this.

Anonymous said...

Anonymous #3 is dead wrong.

At the public hearing held on AB 559, the UW Athletic Director and the Marquette Acting Athletic Director said that they had surveyed other universities which use license fees and found that no other state imposes sales tax on the license fees imposed in those states. One person posted the unsubstantiated allegation that this was wrong. He was asked to give a statutory citation to the law in any other state and has failed to do so.

The truth is that people who buy tickets to attend athletic events at Marquette, Wisconsin, and the Green Bay Packers all pay sales tax on the tickets they buy. There is a specific sales tax exemption which covers the Lambeau Field seat license fee (which is a one-time $1500 vs. $50 to $250 per seat per year at Wisconsin and Marquette), so there is no reason not to extend the same tax treatment to our in-state colleges and universities.

It makes particular sense to extend the exemption to the UW because donors and seat license fee contributors have covered the roughly $200 million cost of building the Kohl Center and upgrading Camp Randall. Unlike Lambeau Field and Miller Park, no one was forced to pay sales tax to pay for the construction.