The End of College Sports
The Republican party controlled House of Representatives has recently passed a tax reform bill that has taken the nation by storm. In the provision, $1.4 Trillion in tax cuts are estimated, but surprisingly college sports organizations will be getting a tax increase.
College sports teams take in the majority of their revenue from ticket sales, advertising and sports boosters. The ticket sales and advertising are straightforward. You buy a ticket and the organization gets some money. You want a Geico ad in the Husky Stadium? You hand over some cash, and ‘Bam!’ its there, but in the tax code boosters are more complex. In the U.S. tax code, non-profits, and those that donate money or something of monetary value can claim a tax deduction of 80% of what the donation is worth. For example, if one donated $100 in pencils to the Husky’s, that same person can write off $80 in taxes for that year. The same goes for football boosters. Donors to the teams donated large sums of money and in return get a tax deduction.
Stopping this, which the house bill would do, is estimated to reduce these donations by 20-30%. So what is the GOP doing to college sports teams? They’re taking away their non-profit status, and in addition to the disappearing tax deductible donations, they have to start paying taxes on the profits they make, but how does this affect education?
Public universities rely heavily on the revenue of these sports organization to fund research projects, give out scholarships and run the day to day business of the school. It is unknown where this new tax revenue is headed, but higher education may have an increasingly smaller budget if implemented. The bill still has to pass the Senate, which many political scientists are skeptical of this happening.