Tuesday, February 11, 2014

Stop playing with other people's money

As the three regular readers of this blog will recognize, I'm rarely in league with Sen. Tom Coburn (R-OK) or Rep. Jason Chaffetz (R-UT), but I'm completely on board with their proposals to revoke the tax-exempt status of the NFL and NHL.

Through a special-interest provision inserted in legislation nearly 50 years ago, both leagues are treated as 501(c)(6) non-profit, commercial organizations--organizations like Chambers of Commerce, local boards of trade, and local real estate boards. Other 501(c)(6) organizations are supposed to promote general business or commercial interests, improve general business conditions, but not engage in business activities themselves.

Unlike other 501(c)(6) organizations, the NFL and NHL directly engage in business activities, such as merchandizing and negotiating broadcasting deals, that benefit their members. Absent the special provision, they would not qualify as tax-exempt. Indeed, other organizations that have specifically promoted their members' business interests rather than general business interests have had to forfeit their tax-exempt status.
Although the individual teams within the leagues are subject to taxation, the revenue that the league offices receive is not. Last year, the NFL--as an organization--received a more than a quarter of a billion dollars in revenue from its member teams. About a tenth of that revenue went directly into the pocket of league commissioner Roger Goodell.

The tax-exempt status amounts to a multi-million dollar annual subsidy to some of the wealthiest people and organizations in the country. The Joint Committee on Taxation estimates that ending the subsidy would return $109 million to the Treasury over the next ten years.

Struggling taxpayers simply can't afford multi-million dollar subsidies to billionaires. Stop the charity to the NFL and NHL.