Robinson: Tax the San Francisco Giants
The San Francisco Giants vs. the San Diego Padres at a game in 2008. Photo courtesy of Wikimedia Commons.

    The San Francisco Giants have a taxable possessory interest over San Jose and Santa Clara County. It’s exclusive and valuable. They’ve never paid the tax that is due. County Assessor Larry Stone should step up to the plate and send them a property tax bill as required by the state tax laws.

    Recently, four San Jose mayors sent a letter to Major League Baseball asking that the Giants territory be abolished, and San Jose be allowed a major league team. That request was summarily rebuffed. Why should the Giants give up exclusive territory? If that’s the way MLB and the Giants want to play, they must pay for the privilege.

    Ron Chun, former San Francisco deputy assessor, assessment appeals board member and an attorney-CPA who once worked for the IRS, explained the law. It was Chun who successfully forced the California Board of Equalization to change Prop. 13 rules so gay families got the same benefits as everyone else in 2002.

    Chun pointed out MLB and the Giants owe the tax based on current tax law. To start, he explains California’s Constitution provides that all property is taxable unless otherwise provided by the state constitution or federal law. California law has a tax on possessory interests. That tax is a form of property tax on the private use of public lands. California defines a taxable possessory interest as a “possession, or a claim or right to possession of land or improvements, that is a) independent, durable and exclusive of others and b) not coupled with ownership of land or improvements in the same person.”

    That’s how Santa Clara County taxes concession stands on publicly owned property. Airlines, restaurants and car rental agencies pay a possessory interest tax for using public land for their private commercial businesses at San Jose Mineta International Airport.

    Major League Baseball and the Giants have an exclusive exemption from federal antitrust laws. And the courts have upheld that right against San Jose. MLB and the Giants have a monopoly to exclude anyone from competing with them that prevents San Jose from getting a major league team.

    Not even Bill Gates, Larry Ellison, Tim Cook, Elon Musk or Mark Zuckerberg can get a baseball team without the approval of MLB, even if they built their own stadium and hired their own players. MLB can lawfully bench anyone, including those billionaires, who may dare think they can own a baseball team in San Jose.

    Yet, while the Giants have a lawful exemption from antitrust laws, that exclusive right is exactly the reason they can be taxed, as they have a government-given taxable possessory interest. California’s definition of a taxable possessory interest includes any “Claim or Right to Possession.”

    MLB and the Giants have a claim or right to possession to and over San Jose and Santa Clara County by law.

    In Scott Free River Expeditions Inc. v. County of El Dorado, the California Court of Appeals upheld a possessory interest tax on a commercial river rafting company that had a county permit to run an exclusive commercial business on the American River. The court said they were being taxed on “the use of that water for commercial purposes,” pointing out that it’s not the water being taxed, but its use. They added the right of using and enjoying the profits of a thing belonging to another, without impairing the substance, constitutes a species of property, and thus has a valuable interest. In layman’s terms, that is the definition of a taxable possessory interest.

    So, the Giants are using San Jose and Santa Clara County as their exclusive territory, under their rights of a government-granted antitrust exemption, which includes excluding any potential competitors for their private commercial business. Their exclusive use of San Jose and Santa Clara County for commercial purposes and private profit is subject to California taxation.

    The reason MLB and the Giants can bench San Jose’s interest in obtaining a professional baseball team is the city has no clout. If the county begins taxing the Giants for their possessory interest, the city will have a strong negotiating position.

    How much is owed is a calculation to be determined by the assessor’s office. Chun estimates MLB and the Giants would owe Santa Clara County at least eight to nine figures in current and back taxes. The county could use that money.

    So, batter up Mr. Assessor. Send the Giants a richly deserved and legally owed tax bill.  Oh and before I forget, go Giants!

    San José Spotlight columnist Rich Robinson is a political consultant, attorney and author of “The Shadow Candidate.” His columns appear every fourth Wednesday of the month.

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