Prepare Your Taxes: Fire Isiah! New York City Council Threatens Madison Square Garden's Property Tax Exemption

The NY Times reports that the New York City Council is threatening to take away the property tax exemption for the World's Most Famous Arena, Madison Square Garden (MSG). This comes at a time when the Garden's biggest tenant is involved in scandal after scandal, not including the way the team is performing on the court, which could also be called a scandal.

While this move to take away a property tax exemption for the Garden is a step in the right direction in terms of public finance, the timing makes you realize that special tax provisions are always dependent upon the mercy of government officials. Government officials can giveth and taketh away tax credits, often for reasons that are arbitrary and in many cases downright ridiculous. To some degree, this may be one of them. While one city council member says the Knicks' performance on the court is not the main reason for this action, the Times quote suggests it could be playing some role:

“I’m not going to be so flippant as to say that the fact the Knicks have absolutely stunk up the basketball court is a reason to get rid of their tax exemption,” said Councilman Lewis A. Fidler, one of the proposal’s sponsors. “But I think certainly the manner in which they’ve conducted their business otherwise has certainly left people feeling less than warm and fuzzy for them.”
He added, “It has perhaps created an environment in which people are willing to pile on.”

I'm pretty confident that if the Knicks were 29-3 and in first place in the Atlantic Division (aka Celtics) instead of 8-24 and in the basement of the Atlantic Division, this issue would have likely not been brought up.

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Yesterday, the Oregon Tax Court handed down a decision about this Oregon law:

[The following] property owned...by...charitable...institutions shall be exempt from taxation:[...]
All real and personal property...dealing exclusively...to support a welfare program. As used in this subsection, 'welfare program' means the providing of food, shelter, clothing or health care, including dental service to needy persons without charge."

Needy persons. The Florence Area Humane Society applied for an exemption, and was denied because they care for needy animals. The Tax Court upheld the denial:

Here, the language of the statute is clear and unambiguous. It defines the target group (of thrift store sales) as certain needy persons. It does not include other entities, organizations, inanimate objects, things, or animals. By restricting that group to exclude animals specifically in the statute, the court cannot ignore the plain meaning of those words. Needy persons do not include animals.

When politicians start exempting certain groups from general taxes, they pick winners that pay no taxes and losers that pay higher taxes. Here, the line was arbitrarily drawn between charities that help needy people (winner) and charities that help needy animals (loser). Look for this law to be changed quickly, which means that taxes will inch a bit higher for everyone else.

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As Mike Huckabee continues to ride momentum from his win in Iowa on Thursday, his tax plan is getting closer scrutiny from the media. Here's a rundown of some of the feature articles on his tax plan, the FairTax, that have run in newspapers over the past month or so.

News Articles:

Huckabee's Tax Plan Appeals, But Is It Fair? - New York Times

Fair Tax? Flat Tax? Candidates Tout Novel Plans - Christian Science Monitor

In Spotlight, 'FairTaxers' Push Cause - Boston Globe

Hitting Huckabee's Tax Plan from the Right & Left - National Journal online

Huckabee Tax Plan Raises Eyebrows - Reuters

Criticism Aside, 'FairTax' Boosts Huckabee Campaign - Washington Post

FairTax Part of Huckabee's Rise, But Idea Does Not Lack Critics - Investor's Business Daily

Huckabee Whips Up Debate with FairTax Plan - NPR

The Fairest Tax of Them All? Proposal Replaces Income Tax With Consumption Tax? - Globe Gazette

Huckabee Campaigning for 23% Sales Tax - Los Angeles Times

Putting the TaxMan Out of Business - Concord Monitor