Now, now. You think the fun’s going to be over, don’t you? You won’t be able to give your coach five million dollars a year and each of your assistant coaches 2.5 million dollars a year; and there’s also that thing, in the proposed tax bill, about no more humongous tax deduction on that humongous donation you give a university for the right to purchase humongously overpriced season tickets.

[I]n 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.”

“Every time I think about it, I want to throw up,” [says tax law expert John D. Colombo]. “The effect of this exemption in the tax code is that my money, as a taxpayer, is going to help some guy be able to sit on the 50-yard line.”

These tax experts have jumpy stomachs. Most of us instinctively understand the educational and charitable urgency of tax-exempt bonds to subsidize new football stadiums (the new tax bill’s gunning for that one too), tax-free multimillion dollar compensation for coaches, and 80 percent deductions for 50-yard line sitting…

I mean, sure, everyone knows that “These [university athletic] programs are not consistent with underlying theories of exemption, and in fact are perfect examples of why commercial revenues of charities should be subject to taxation.” But boys will be boys, and boys write rolling around in the dirt concussing your head legislation; and no one is more surprised than ol’ UD that a bunch of Republican boys are actually sounding semi-serious about doing away with the fun…

But seriously – as opposed to semi-seriously – if you think any of these proposals will go anywhere, you also thought the University of North Carolina would be punished for twenty years of fake courses.

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6 Responses to ““[T]ax-exempt organizations would be subject to a 20% tax on compensation in excess of $1 million that’s paid to any of their five most highly compensated employees; that would cover scores of college coaches and athletics directors.””

  1. David Foster Says:

    “tax-exempt organizations would be subject to a 20% tax on compensation in excess of $1 million that’s paid to any of their five most highly compensated employees”

    Not very draconian; if the ‘non-profit’ pays $2 million to each of 5 employees, they will be taxed 20% of $5 million, ie $1 million, which is less than the salary expense would be for hiring one more of the employees in that category.

    A more appropriate approach, IMO, would be that the organization loses its nonprofit status *altogether* if any employee is paid more than $X, where the number is annually adjusted for inflation.

    For too many organizations today, the term ‘nonprofit’ means only that there are no pesky shareholders with whom the money must be shared, allowing it to be reserved for the key employees for whose benefit the whole thing is actually being run.

  2. Margaret Soltan Says:

    David: That makes all kinds of sense. But I figure it would have as much chance of becoming law as any of the proposals I mentioned in the post.

  3. dmf Says:

    https://www.nytimes.com/2017/11/04/us/college-endowments-tax.html

  4. Margaret Soltan Says:

    Thanks, dmf. Quoted from it in my latest post. UD

  5. Jack/OH Says:

    “For too many organizations today, the term ‘nonprofit’ means only that there are no pesky shareholders with whom the money must be shared, allowing it to be reserved for the key employees for whose benefit the whole thing is actually being run.”

    David Foster, that’s exactly what I’ve been told by knowledgeable people. Empire-building for the benefit of the great people.

  6. dmf Says:

    pushback http://reason.com/blog/2017/11/05/nfl-prepares-to-fight-tax-reform-bill-th

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