Last week Republican Senator Tom Coburn of Oklahoma introduced an amendment to a bill called the Marketplace Fairness Act (the so-called "Internet tax") that would revoke the tax-exempt status of sports leagues. This is the news, and Think Progress has covered it nicely here. Also news, to most people: Sports leagues are taxed as charities.
Coburn called out leagues for this in a 2012 book that claimed taxpayers lose $91 million a year because the NHL, the NFL, the PGA, et al, are considered 501(c)(6) charitable organizations, ostensibly in business to promote their sports. His amendment charges that those bodies instead are in the business of promoting their own ability to make shitloads of money, and should be taxed more like corporations.
From Think Progress:
NFL teams pay membership dues totaling roughly $6 million per team, but they are allowed to write those off for tax purposes as donations to a charitable organization. As Andrew Delaney explained in the Vermont Law Review in 2010, the NFL, which collected $192 million in revenue largely through membership dues in 2009, then pours much of that money back into a stadium fund that allows owners to access interest-free loans as long as they secure taxpayer financing for either new stadiums or improvements to existing facilities. The NFL’s dues, then, go almost solely toward the enrichment of its franchise owners even as they are exempt from federal taxation (and often from state and local taxation as well). Taxpayers get hit on two fronts: not only do they lose out on federal tax revenues, they also end up footing the bill for new stadiums and stadium improvements (most recently in Atlanta and Minnesota, with ongoing efforts in Miami and other cities).
Basically we're subsidizing with tax breaks the NFL's ability to leverage big stadium deals that we often wind up subsidizing directly with local taxes. We're also subsidizing with tax breaks the salaries of such notable nonprofiteers as NHL commissioner Gary Bettman ($4.3 million), PGA commissioner Tim Finchem ($5.2 million) and the NFL's top eight executives ($51.5 million). By point of comparison, here's what actual charities pay their top earners.
Apparently, though, Coburn's amendment is unlikely to see a vote. Here's hoping the good senator sees fit to press this issue during the remainder of his term, as it would constitute an unusually salubrious use of his time.
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