Should the NFL pay taxes?
February 3, 2014
Jeremy Quattlebaum, Student Voices Staff Writer
As the confetti is swept up from the field of MetLife stadium, another year of football comes to a close. But this off-season, the talk might be more on the financials of the National Football League than on trades, because the league does not pay taxes, and Sen. Tom Coburn (O.K.) wants to change that.
"No major professional sports league deserves to have a tax exemption," said Sen. Coburn. The senator has been trying for years to change the status of the NFL, currently recognized as a 501(c)(6), a non-profit trade organization like your local Better Business Bureau.
The federal government recognizes the NFL, like the PGA and NHL, as non-profit entities, something that was decided in 1986 when the last major changes to the US tax code were made. The NFL, though, gets special mention in the language of the law. "(6) Business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues (whether or not administering a pension fund for football players), not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual."
Coburn doesn’t see it that way and is aiming to change the tax code to make professional sports leagues pay taxes like corporations like McDonalds and Microsoft. Coburn also claims that by giving the leagues tax breaks; they are essentially giving tax increases for everyone else.
“Tax earmarks are essentially tax increases for everyone who doesn’t receive the benefit,” Coburn said in his press release proposing to tax America’s most popular sport. “In this case, working Americans are paying artificially high rates in order to subsidize special breaks for sports leagues. This is hardly fair.”
That’s why Coburn has drafted an amendment to the tax code that would strip all professional sports leagues of their tax-exempt status. While the amendment has gotten some press around the Super Bowl, it looks doubtful that the measure will pass the Senate.
Now it should be noted that every team, ticket, player, and television fees are taxed, but the billions in yearly profits the league makes year in and year out are not. The NFL and its supporters also claim that there is confusion about what the league does and where the profits are made.
Supporters of the NFL’s tax-free status, like Jeremy Spector, an outside tax consultant for the NFL, make the argument that the league is rightly classified.
Spector makes the claim that, first when talking about the NFL, it is just the head office and not the teams, which are considered taxed corporations. The teams are where most of the money is made, and those profits are rightly taxed. The head office acts as a facilitator of play, drafting the rules, hiring the referees, and run the youth football program, and the teams are the benefactors of the leagues duty.
“The league office acts as a trade association for the NFL clubs. In the same way that other trade associations support companies in other lines of business, it establishes rules and standard practices for its members, develops programs to help them run their operations more efficiently and profitably, and promotes the business in the broader community. Trade associations are nonprofit organizations,” said Spector in an U.S. News and World Report editorial.
What do you think?
Should the NFL pay taxes like a corporation, or should it remain a non-profit trade organization? Does the league already pay taxes through the teams? If you were a Senator, how would you vote is Coburn’s amendment? Join the discussion and let us know what you think!
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