Instead of wondering if student-athletes can pay taxes…

… a better question might be whether schools are prepared for this shot across the bow:

The House Ways and Means Committee, under the direction of chairman Dave Camp (R-Mich.), is circulating a draft of what could become a bill known as the Tax Reform Act of 2014. Under one provision, tax-exempt organizations – including, committee staffers say, nearly all public and private colleges and universities – would be subject to a 25% excise tax on compensation in excess of $1 million paid to any of its five highest-paid employees for any given tax year.

It’s not exactly chump change, either.  The non-partisan Joint Committee on Taxation estimates the excise-tax provision would increase tax revenues by $4 billion from 2014 through 2023.

Do I think it’ll pass?  Maybe not.  Do I think it will stir the already roiled waters the NCAA is attempting to navigate?  You tell me.

But the staffers are well aware of its potential impact on colleges and what they pay high-profile college coaches, who are among the nation’s top-paid and best-known public employees. And reflects growing skepticism about big-money college sports programs’ place at institutions that enjoy broad tax protections and whose donors gain tax benefits from their gifts.

“Large salaries at non-profit organizations beg the question: Are dollars really going to the core mission — whether that be charitable work, providing health care or educating students — or is that money serving another purpose?” committee communications director Sarah Swinehart said in an e-mail to USA TODAY Sports. “The draft is an opportunity to discuss whether or not the tax code should provide an incentive for multi-million dollar salaries at non-profits.”

When you start talking tax code, you start scaring the crap out of university administrators.

I hope somebody asks Emmert about tax code incentives at the Final Four presser.

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25 Comments

Filed under It's Just Bidness, Political Wankery, The NCAA

25 responses to “Instead of wondering if student-athletes can pay taxes…

  1. Ed Kilgore

    Afraid the Tax Reform Act of 2014 ain’t going anywhere, for reasons that have nothing to do with this provision. But I won’t tell Emmert if you don’t.

    • Yeah, I know – Camp’s gone, his party won’t get near his bill, etc.

      But it’s got some potency in terms of sending a message to the NCAA that maybe Congress isn’t as friendly as Emmert and Co. would hope.

  2. Dog in Fla

    Just as I thought – false flag /salary cap/tax increase ops by people who hate the free market and have taken over/inhabited as a host the body of a Republican House Ways and Means Chairman so someone could read his lips. Otherwise this Bernie would face a primary challenge so he could spend more time with his family

  3. Spence

    God forbid non-profits are able to run themselves like a business where they can attract the smartest and brightest to help people in need. If that logic prevails, I look forward to the assault on doctors’ salaries. Shouldn’t they just want to heal people for the joy and sacredness state in their oath (sarcasm)?

    • Dog in Fla

      I believe if you check with the doctors, they will say that the assault on their salaries has been going on forever.

    • DawgPhan

      except that they aren’t businesses, decided on their own free will to define themselves that way, and receive special privileges based on their chosen status.

      The response is Pavlovian from some folks.

      • Normaltown Mike

        what “special privilege”?

        They don’t distribute profit to shareholders. Other than that, they are no different.

  4. Hogbody Spradlin

    There’s already ammunition in the Internal Revenue Code that would allow the feds to tax ‘excessive compensation’, if you define it as such. Tax exempt organizations are subject to disqualification, penalties, and/or excise taxes if more than an ‘insubstantial’ part of their activities (read expenditures) are not related to their non-profit or charitable purpose. The problem: coach salaries, while I’d gladly trade mine for Mark Richt’s, are peanuts in a big university budget.

    • Gaskilldawg

      The reason a university has tax exempt status is because of its educational mission. So how exactly does Nick Saban advance the educational mission of Alabama or John Calipari advance the educational mission at Kentucky?

      Also, why is my check to give me the right to buy UGA football tickets partiality tax deductible but a check to buy a personal seat license allowing me to buy New York Giants football tickets not?

      The money lust in college sports the last twenty years has caused a lot of folks to question whether it is really an extracurricular pastime that is a part of the educational experience or a means for some folks to get rich.

      • This is exactly the kind of questioning the NCAA and schools don’t want being raised in Congress.

      • Normaltown Mike

        “The reason a university has tax exempt status is because of its educational mission”

        No. The University is a function of the state and (unless Harry Reid is correct in that the Koch brothers own it) the state is not owned by shareholders.

        A university can just as easily be organized for the profit of shareholders.

  5. South FL Dawg

    Good stuff. But this talk with regards to schools and hospitals has been going on since the 80’s that I’m aware of, maybe longer. Has its time finally come? I don’t think so. It’s education and healthcare, and no special interest group will let it fly. But it’s good to keep bringing up and who knows maybe some day…..

  6. NewnanDawg

    I think there will be a whole new group of Fair Tax supporters coming forward soon…..

  7. MikeInValdosta

    As soon as the union is formed, finding a way to have the schools pay the union dues will be the next issue of the day. When the union dues paying mechanism is in place, expanding union membership will become the issue of the day. I don’t find it a coincidence this all hails from Chicago.

    In the end, the union bureaucrats and lawyers will be far more compensated than any of the rank and file at risk of injury.

    America: if the executives fly private jets, the “people” need a representative flying a private jet too, in the name of fairness.

    I hope to hell the schools just pay them, as they should have been for a long time. If they don’t, none of us will ever be afford to watch them on television, let alone attend a game.

  8. Rp

    Congress is really slipping. How did they leave this revenue stream alone for so long without trying to tax it? At some point we will get a statement from a pol saying that the American people have “subsidized” these programs to the tune of millions of dollars by not taxing them.

    • We haven’t? What would you call all the tax breaks sports, both collegiate and professional, get from politicians at every level from municipal to federal?

    • Reservoir Dawg

      Don’t get me started on the NFL’s 501(c)(3) status. There’s enough tax avoided right there to pay for solid gold Cadillacs for every college player from the Eefs right on up to Tuscaloosa.

  9. Slaw Dawg

    Couple this with a similar excise tax on publicly traded corporations for paying bonuses to their top 5 execs following a year in which (a) the company lost money or (b) they fired more than 5% of their domestic work force, and I’m on board, man. Whatever damage has been done to my favorite sport still pales next to the carnage wrought by overpaid MBAs who happily shipped jobs overseas and promoted junk derivative securities to the working class so they could live the high life.