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Meadows Bill Would Flag Pro Sports Leagues
Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.
RALEIGH — U.S. Rep. Mark Meadows, R-11th District, wants to sack the National Football League's tax-exempt status because, he said, it's unfair for a multibillion-dollar sports enterprise to enjoy special tax treatment usually reserved for churches, educational entities, and charitable organizations.
"Even though I'm an avid NFL and football fan, it's hard for me to say they should get a free pass and not have to pay taxes, but hard-working moms and dads should," Meadows said in explaining why he will co-sponsor a bill by Rep. Jason Chaffetz, R-Utah, to rescind the NFL's 501(c)6 nonprofit designation as a trade or industry association.
Chaffetz is chairman of the House Oversight and Government Reform Committee. Meadows and Republican Mark Walker, who represents North Carolina's 6th District, are on that committee. Walker did not respond to requests for comment.
H.R. 547, the Properly Reducing Overexemptions (PRO) for Sports Act, targets sports associations with annual revenues exceeding $10 million. The NFL generates about $10 billion annually.
While the NFL may be the best-known entity H.R. 547 would address, Meadows said, "there are dozens of professional sports organizations that enjoy nonprofit status," including the NHL, PGA, and LPGA.
Major League Baseball forfeited its tax-exempt status in 2007, and the NBA never received the nonprofit perk.
Some proponents of eliminating the NFL tax-exempt status point to the lucrative salary of Commissioner Roger Goodell.
"Certainly if they can afford a $44 million salary for the commissioner, I would think that they could afford to pay the taxes on any potential earnings that they might have," Meadows said. And there are many millions of dollars more being paid to NFL administrative personnel, attorneys, and the like.
"I'm a business guy, so anybody making a high salary is not as much an issue for me as it is if they're using other hard-working American taxpayers' dollars to pay that," he said.
Meadows does not foresee "a direct impact" on individual sports franchises if the legislation passes because they already operate as for-profit businesses at the team level.
Representatives from the NFL, NHL, Carolina Hurricanes hockey team and Carolina Panthers football team did not respond to requests for comment.
The congressional Joint Committee on Taxation said in 2013 that repealing the tax exemption on the NFL and NHL alone would raise about $109 million in revenue over a decade.
"The main point would be that it isn't really going to do anything" in raising significant tax revenue, said Alan Cole, an economist with the Tax Foundation, a nonpartisan tax research group.
In terms of the NFL, "you're talking about removing the tax exemption from an office that essentially runs the league, but it doesn't have any owners, the money doesn't flow back to shareholders, there aren't profits to be taken. Where the profits go is generally to the teams themselves," Cole said.
"When people propose revoking the tax-exempt status, it's more of a symbolic gesture than anything else, and the places where all of the money actually goes, the IRS has been collecting millions of dollars for years," Cole said.
"The big picture is if you're from Carolina, the tax revenue there comes from Jerry Richardson's individual tax forms. Right there on his 1040 he'll have the income from the Carolina Panthers," Cole said.
"You'll see the team send forms to the IRS reporting the income for all of the players, and all of the coaches, and that really does get taxed" for all 32 teams, he said.
Cole said each of the pro sports associations have "specific grandfathered tax and legal status because of their very weird and unique organizations," and changing their tax structure may be warranted, though he has no strong opinion about it.
Some congressional members believe all guilds should be taxed, Cole said. Others have submitted bills to rescind the NFL's tax-exempt status because it allows the Washington Redskins franchise to retain its name despite protests from political activists and some American Indian groups.
While he is not as familiar with the NHL, Cole said most of U.S.-based teams other than the New York Rangers frequently lose money, "so I would wonder whether there is any taxable income there at all." Individual franchise owners are "almost certainly taxed correctly" for wages and sales in the same way NFL teams are.
"It's not a matter of tax revenue and the dollar amount as much as it is in the spirit of just trying to be fair and equitable" to working Americans, Meadows said. "The logical conclusion" is that if MLB and the NBA are deemed for-profit associations, the NFL should be as well.
"We see this more as a policy issue" to ensure nonprofit status is conferred only on those truly deserving of it, he said.
Nor does he worry this could be a springboard into targeting other nonprofit organizations who may be out of favor with a political party or the Obama administration.
"If the IRS gets overzealous like they are with targeting conservative groups, that's something that we've been passionate about on the Oversight and Government Reform Committee," and would fight back against any unintended consequences, Meadows said.
The bill currently is in the Ways and Means Committee chaired by U.S. Rep. Paul Ryan, R-Wisc.
Meadows said Ryan has made tax reform his "highest priority" as Ways and Means chairman, and will push much bigger issues.
"What I think you will see is within the first six months of this year is a real concerted effort to make the tax code simpler, fairer, and certainly less burdensome on the American people," Meadows said.
"With that said, it is a herculean task that [Ryan] faces, and if we don't see real progress in the first six to seven months of this Congress, I don't think we'll see it happening over the next two or three years," Meadows said.
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Measure would end tax-exempt status for NFL, others
RALEIGH — U.S. Rep. Mark Meadows, R-11th District, wants to sack the National Football League's tax-exempt status because, he said, it's unfair for a multibillion-dollar sports enterprise to enjoy special tax treatment usually reserved for churches, educational entities, and charitable organizations.
"Even though I'm an avid NFL and football fan, it's hard for me to say they should get a free pass and not have to pay taxes, but hard-working moms and dads should," Meadows said in explaining why he will co-sponsor a bill by Rep. Jason Chaffetz, R-Utah, to rescind the NFL's 501(c)6 nonprofit designation as a trade or industry association.
Chaffetz is chairman of the House Oversight and Government Reform Committee. Meadows and Republican Mark Walker, who represents North Carolina's 6th District, are on that committee. Walker did not respond to requests for comment.
H.R. 547, the Properly Reducing Overexemptions (PRO) for Sports Act, targets sports associations with annual revenues exceeding $10 million. The NFL generates about $10 billion annually.
While the NFL may be the best-known entity H.R. 547 would address, Meadows said, "there are dozens of professional sports organizations that enjoy nonprofit status," including the NHL, PGA, and LPGA.
Major League Baseball forfeited its tax-exempt status in 2007, and the NBA never received the nonprofit perk.
Some proponents of eliminating the NFL tax-exempt status point to the lucrative salary of Commissioner Roger Goodell.
"Certainly if they can afford a $44 million salary for the commissioner, I would think that they could afford to pay the taxes on any potential earnings that they might have," Meadows said. And there are many millions of dollars more being paid to NFL administrative personnel, attorneys, and the like.
"I'm a business guy, so anybody making a high salary is not as much an issue for me as it is if they're using other hard-working American taxpayers' dollars to pay that," he said.
Meadows does not foresee "a direct impact" on individual sports franchises if the legislation passes because they already operate as for-profit businesses at the team level.
Representatives from the NFL, NHL, Carolina Hurricanes hockey team and Carolina Panthers football team did not respond to requests for comment.
The congressional Joint Committee on Taxation said in 2013 that repealing the tax exemption on the NFL and NHL alone would raise about $109 million in revenue over a decade.
"The main point would be that it isn't really going to do anything" in raising significant tax revenue, said Alan Cole, an economist with the Tax Foundation, a nonpartisan tax research group.
In terms of the NFL, "you're talking about removing the tax exemption from an office that essentially runs the league, but it doesn't have any owners, the money doesn't flow back to shareholders, there aren't profits to be taken. Where the profits go is generally to the teams themselves," Cole said.
"When people propose revoking the tax-exempt status, it's more of a symbolic gesture than anything else, and the places where all of the money actually goes, the IRS has been collecting millions of dollars for years," Cole said.
"The big picture is if you're from Carolina, the tax revenue there comes from Jerry Richardson's individual tax forms. Right there on his 1040 he'll have the income from the Carolina Panthers," Cole said.
"You'll see the team send forms to the IRS reporting the income for all of the players, and all of the coaches, and that really does get taxed" for all 32 teams, he said.
Cole said each of the pro sports associations have "specific grandfathered tax and legal status because of their very weird and unique organizations," and changing their tax structure may be warranted, though he has no strong opinion about it.
Some congressional members believe all guilds should be taxed, Cole said. Others have submitted bills to rescind the NFL's tax-exempt status because it allows the Washington Redskins franchise to retain its name despite protests from political activists and some American Indian groups.
While he is not as familiar with the NHL, Cole said most of U.S.-based teams other than the New York Rangers frequently lose money, "so I would wonder whether there is any taxable income there at all." Individual franchise owners are "almost certainly taxed correctly" for wages and sales in the same way NFL teams are.
"It's not a matter of tax revenue and the dollar amount as much as it is in the spirit of just trying to be fair and equitable" to working Americans, Meadows said. "The logical conclusion" is that if MLB and the NBA are deemed for-profit associations, the NFL should be as well.
"We see this more as a policy issue" to ensure nonprofit status is conferred only on those truly deserving of it, he said.
Nor does he worry this could be a springboard into targeting other nonprofit organizations who may be out of favor with a political party or the Obama administration.
"If the IRS gets overzealous like they are with targeting conservative groups, that's something that we've been passionate about on the Oversight and Government Reform Committee," and would fight back against any unintended consequences, Meadows said.
The bill currently is in the Ways and Means Committee chaired by U.S. Rep. Paul Ryan, R-Wisc.
Meadows said Ryan has made tax reform his "highest priority" as Ways and Means chairman, and will push much bigger issues.
"What I think you will see is within the first six months of this year is a real concerted effort to make the tax code simpler, fairer, and certainly less burdensome on the American people," Meadows said.
"With that said, it is a herculean task that [Ryan] faces, and if we don't see real progress in the first six to seven months of this Congress, I don't think we'll see it happening over the next two or three years," Meadows said.
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