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Tax break for 'The Boss'

There is nothing wrong with the theory presented by Baltimore City Council President Bernard C. "Jack" Young that lowering the city's 10 percent admissions and amusement tax at the Royal Farms Arena for major concerts and comedy acts (those with gross tickets sales of $500,000 or more) might help the facility draw more big-name performers. One might achieve something similar by reducing taxes on any number of businesses — after all, as conservatives like to point out, the more you tax an activity, the less you will have of it.

But there's a big difference between the potential to benefit Baltimore and the reality of what might happen next. Perhaps this legislation would bring more big names to Royal Farms or maybe it would simply make it more profitable for the performers who would book the facility anyway. If it turns out to be the latter scenario, that's all well and good for Bruce Springsteen and The E Street Band (scheduled to perform April 20 at Royal Farms, incidentally) and his brethren, but it means the city is out millions of dollars in tax revenue for no good reason.

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And, in case the City Council missed it, these are rather lean times for a city that badly wants to spring back from the Freddie Gray debacle and needs every dime it can muster to bring jobs, improve schools, keep the streets safe, rebuild housing and failing infrastructure and upgrade public transportation, to name a few of the more obvious priorities. Yet Baltimore is facing a projected $65 million shortfall in next year's budget, and agencies have already been asked to reduce their funding requests by 5 percent. So why now? Why not study the pros and cons? Why not wait for the next mayor to decide whether this leap of faith is a worthwhile strategy or a handout to Rihanna (already coming April 9, by the way)?

Sadly, Mr. Young and the bill's supporters have no real answers for those questions aside from repeating their blind faith that those hired to do the booking at the city-owned arena are confident of success. And if those managers are not successful in booking Lady Gaga or Madonna or the other major acts that they believe the tax cut would lure? "If they don't produce those shows, we could always find someone else" to book the arena, Mr. Young insists.

Maybe, but how long would it take to decide the new strategy was a success or a failure? One year? Two? Five? Reducing taxes doesn't need to be a shot in the dark any more than raising taxes ought to be done blindly. Surely, the more reasonable choice would be to ask the Baltimore Development Corporation to study the matter, to look more closely at the practice in comparable facilities across the country as well as those nearby like Verizon Center. Let a professional dig into the numbers as thoroughly and objectively as possible.

Too much of this proposal has a seat-of-the-pants quality about it. Why not lower the tax from 10 percent to 5 percent, which is the rate charged performers at Merriweather Post Pavilion? Or, why not keep the tax at 10 percent but use the revenue exclusively to help pay for a new facility to replace Baltimore's aging and undersized arena? Wouldn't that be the best long-term strategy to bringing more performers to the city? And if Baltimore grants this tax break, what's to keep other venues like the Meyerhoff Symphony Hall or Lyric Opera House or M&T Bank Stadium from asking for the same for their concerts?

In real life, no business would operate like this. Corporate executives would insist on due diligence before such a major fiscal decision was made. Where's the data to support Mr. Young's theory of "tax them less and they will come?" It isn't there. To adopt the plan would require a leap of faith that simply isn't justified — particularly given that Royal Farms is already regarded as the top performing arena of its size in the nation. Mr. Young may fret that nobody is offering to finance a study, but that's a small financial cost compared to the big risk he's willing to take.

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