10/4/19
A consultant has told the city of Chicago and the state
of Illinois that no private operator could make money on a Chicago
casino under the onerous tax regime contained in the legislation laying the
groundwork for such a gaming emporium.
Judging from what I’ve been reading, the consultant is probably
right. Further, yours truly might be the
last guy who is in favor of taxing anything heavily unless the real purpose
behind such taxation is to wipe out the activity being taxed. However, I think I have come up with a better
approach to testing the viability of a casino under existing legislation.
A couple of points:
First, yours truly realizes that there are pitfalls to my
approach, the most salient of which is operators’ bidding with the sure expectation
of, after having won the license, coming back after a short period of time asking
for relief under threat of closing the place down.
Second, since I wrote the below letter to the Chicago Sun-Times,
9th Ward Alderman Anthony Beale has come up with a proposal
that involves awarding the license first and then having the licensee negotiate
a better deal with the legislature.
The first point does not by any means invalidate my idea; protections
can be written into the bidding process.
The second point provides at least a measure of credibility to an
approach that does not simply accept the consultant’s report as the final word.
This letter, too, was not published, which isn’t surprising
given that the Sun-Times publishes only two or three letters per
day. However, the letter is worth sharing
with my growing readership:
9/22/19
As Rich Miller (Opinion, 9/22/19) points out, the tax rate
set by lawmakers for a Chicago casino is “astoundingly high” and a consultant’s
report concludes that it would be “nearly impossible” for an operator to make a
profit under such a structure.
However, rather than take the word of a consultant, wouldn’t
a better approach be for the Lightfoot administration to solicit bids from casino
operators under the current tax structure and see what happens? If the city gets reasonable bids from
experienced, competent operators under the existing tax structure, why should
the revenue strapped city and state sweeten the deal for the operators? If the process attracts no bidders, at least
the Mayor can go to the legislature with concrete proof that the tax structure it
has put in place is unworkable. Perhaps
the bidding process could be expanded to include the tax structure itself.
Soliciting bids, and perhaps bids even extending to the tax structure
itself, would seem to at least be a truer test of the onerousness of the
proposed tax structure than taking the word of consultant as holy writ.
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