In addition to the elimination of property tax exemptions for rich nonprofits that we’ve mentioned previously, here’s another piece of tax reform I support – the repeal of the tax payer subsidy to college sports…
Eric Zorn writes:
College sports is a big-time business, tickets are in high demand at major universities and charging what the market will bear is the American way. In fact, judging by the secondary market on StubHub, where single seats to the Ohio State game are going for more than $2,000, tickets to Michigan football games are still vastly underpriced.
What I don’t understand, however, is the law that allows ticket buyers to write off 80 percent of their “preferred seating donation” as a charitable contribution for federal tax purposes.
That’s right. High rollers in the swankiest suites can subtract $4,500 from their taxable income, a benefit worth up to $1,782 off their tax bill, as though they had given that money to a soup kitchen or hurricane relief.
Put another way, for each such privileged fan, the federal government effectively provides a $1,782 ticket subsidy.
And, in the mid-1980s, when these preferred-seating donation scams first arose, the Internal Revenue Service issued a common-sense ruling that a mandatory donation linked to the purchase of seasons tickets was a quid pro quo and so not deductible for tax purposes.
Legislators representing schools in the powerful Southeastern Conference “went crazy,” said University of Illinois emeritus law professor John D. Colombo, a specialist in tax laws governing charitable organizations. And in 1988, Congress added subsection 170(l) to the IRS code that specifically allowed for an 80 percent deduction on donations to “institutions of higher education” that granted “the right to purchase tickets for seating at an athletic event.”
In 2015, the Obama administration asked Congress to repeal subsection 170(l), claiming it will drain at least $2.5 billion from public coffers over the next decade. Duke University law professor Richard Schmalbeck estimated the 10-year tax receipts loss at $20 billion.
Congress ignored the suggestion.
(click here to continue reading If Congress can’t eliminate the college football ‘charity’ scam, what hope is there for a tax overhaul? – Chicago Tribune.)
Ain’t that a bitch? Our tax dollars hard at work, inflating college coaches salaries, fancy high-tech training facilities, inflating player salaries, oh, wait, the colleges don’t even pay their athletes a stipend, the players work for basically, “exposure”. Hmmm, maybe there are deeper issues that need to be solved with Division 1 teams.