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The Ohio Supreme Court ruled Tuesday morning that revenue earned by NASCAR from selling the rights to broadcast stock car races and merchandise to Ohio fans is not subject to state business taxes.

In a unanimous decision, the state supreme court rejected the Ohio Tax Commissioner, Jeffrey McClain’s, order that NASCAR owes the state almost $550,000 for money earned from broadcasting races, online marketing, and sponsorship fees.

The court split 4-3 on whether the state should tax royalties NASCAR grants to banks, insurance companies, and manufacturers, including the maker of NASCAR-branded cups and fuzzy dice, as reported by Court News Ohio, a service of the Ohio Supreme Court.

In January, NASCAR Holdings Inc. argued in court that the Ohio business tax was illegal. According to the Ohio Department of Taxation, business tax is levied on nearly all businesses in the state with a gross income over $150,000 regardless of whether they are Ohio Residents.

This resulted in the Ohio Supreme Court due to the Ohio Tax Commissioner’s Office investigating NASCAR in 2011 for alleged business activity occurring in Ohio from July 1, 2005, through December 31st, 2010. The investigation found that NASCAR owed taxes on $186 million in Ohio revenue. The Ohio Board of Tax Appeals supported the Commissioner’s decision.

Media companies such as FOX bought the rights to broadcast NASCAR’s intellectual property in certain regions, including Ohio, the state argued in court. As NASCAR received money for the broadcast licenses, the tax commissioner argued that the revenue should be treated as gross receipts under state law and subject to the Commercial Activity Tax (CAT).

“NASCAR can avoid any further conflict with the Commissioner by specifically excluding Ohio from all of its licensing contracts,” the Tax Commissioners Attorneys said.

Court News Ohio reports, Republican Justice Pat DeWine, writing for the court majority, explained that the dispute focuses on a CAT provision that allows the state to tax “the right to use” NASCAR’s intellectual property in the state. He also noted, that NASCAR’s contracts granted rights to use both its trademarks and logos nationally and internationally. No contracts tied payments to NASCAR for the right to use its property specifically in Ohio. The revenue streams were not based on NASCAR’s Ohio intellectual property, DeWine wrote.

According to NASCAR, they conduct races at over 100 tracks in 39 states and Canada and broadcast races in over 150 countries.

The ruling will largely reduce NASCAR’s tax burden on Ohio. It does not have to pay taxes on earnings of $186 million, but will rather pay taxes on earnings under $500,000 according to Court News Ohio.

The Ohio Supreme Court returned the case to the Ohio Board of Tax Appeals to determine what taxes, if any, NASCAR would be responsible for by hosting seven races in Ohio in a minor racing series held between 2005 and 2010.

The Republican judges on the court Chief Justice Maureen O’Connor and Justices Sharon Kennedy and Patrick Fischer agreed with DeWine’s opinion.

Court News Ohio reported, Democratic Justices Melody Stewart, Michael P. Donelly, and Jennifer Brunner said that NASCAR’s licensing deals differing from its broadcast deals, allow the company to earn additional revenue from the sales made through the use of its trademarks. They said the state had the right to appraise and tax a portion of the sales made in Ohio.

The Ohio Chamber of Commerce supported NASCAR by filing an amicus brief saying the state is trying to use the CAT on a broadcast agreement signed outside of Ohio between NASCAR and FOX, neither of which is based in Ohio.

“The Ohio Chamber seeks a stable and predictable legal system which fosters a business climate where enterprise and Ohioans prosper. Many of the Ohio Chamber’s members are subject to Ohio’s CAT, and thus have an interest in the tax being applied in a way that is fair and predictable, without creating an undue compliance burden for business,” Ohio Chamber CEO Steve Stivers said.

– – –

Hannah Poling is a lead reporter at The Ohio Star and The Star News Network. Follow Hannah on Twitter @HannahPoling1. Email tips to [email protected]
Photo “NASCAR” by NASCAR.

 

 

 

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Tags: fox justice pat dewine justice sharon kennedy nascar ohio chamber of commerce ohio supreme court steve stivers that nascar’s the ohio supreme court the ohio supreme court the commissioner the right to use argued in court and predictable the sales made in the state according business tax the ohio that nascar the revenue to the ohio at the ohio whether the revenue

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Michigan Charter School Advocates Prepare for Anticipated Democratic Cuts

by Bruce Walker

 

Election of Democratic majorities in the Michigan House and Senate is a warning shot for the state’s public charter schools.

The incoming bicameral majorities and reelected Democratic Gov. Gretchen Whitmer have already signaled antipathy toward public charter schools. Drawing much of the Democrats’ ire are for-profit education management organizations operating 42% of public charter schools in Detroit alone as of 2021.

Holly Wetzel, director of public relations for the Mackinac Center for Public Policy, told The Center Square that Whitmer already has supported cutting state aid for public online charter schools and warned the governor could roll back the lift on enrollment caps that former Gov. Rick Snyder, a Republican, signed into law in 2011.

“It is likely that charter schools will unfortunately continue to face proposed budget decreases, potential closures, and other attacks from Democratic lawmakers this upcoming session,” Wetzel said. “This would be a slap in the face to the nearly 10% of Michigan students who choose to attend charter schools. Charter schools across the state have historically outperformed their neighboring district schools, despite receiving significantly less overall funding.”

The Center Square reported in October that traditional public schools lagged significantly behind public charter schools, according to the most recent National Assessment of Educational Progress. In a survey conducted last spring by Lansing-based Marketing Resource Group, 64% of Michiganders polled support public charter schools, up 5 percentage points from a similar poll conducted in 2020.  Conversely, unfavorable views of PCSs fell to 23% from 25% one year prior.

A second study revealed PCS enrollment increased each year during the three years of the COVID-19 pandemic, while traditional public school enrollment dropped.

“Instead of placing further restrictions on charter schools, lawmakers should be working to ensure that students have access to the fullest range of opportunities,” Wetzel said.

In an email to The Center Square, Michigan Association of Public School Academies President Dan Quisenberry addressed learning losses as a result of lengthy school closures during the pandemic.

“We’re just now starting to realize the full impact that the pandemic had on learning loss, and schools across the state continue to wrestle with a teacher shortage,” Quisenberry said. “Those should be the top priorities for everyone in Lansing. This is no time to be playing politics with kids or serving special-interest groups. Both sides in Lansing need to work together to do what’s best for kids. We very much look forward to working with them.”

Public charter schools were introduced to Michigan in 1994, signed into law by Republican Gov. John Engler. By 1997, 100 were operating in the state. Two years later, the 150 limit had been reached. It wasn’t until the fiscal year 2022 budget that the gap between state spending on public charter schools and traditional public schools was closed. Prior to that, charters were funded at the minimal level while traditionals received the maximum.

“Charter schools have always been a bipartisan issue, and we embrace the new political climate in Lansing,” Quisenberry said. “We look forward to working with members on both sides of the aisle, helping them realize all the opportunities that charter schools are providing to students in our state.”

Quisenberry added, “Recent polling shows that charter school popularity is very high and growing in Michigan among all groups – Democrats, Republicans and independents alike. It’s especially high among minority parents. I think everyone in Lansing is looking at the same polls we are.”

– – –

Bruce Walker is a regional editor at The Center Square. He previously worked as editor at the Mackinac Center for Public Policy’s MichiganScience magazine and The Heartland Institute’s InfoTech & Telecom News.
Photo “Teacher” by Max Fischer.

 

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