According to today’s WSJ, the National Football League is protesting new IRS rules that require it to disclose the salaries of “key employees” earning more than $150,000 a year. This disclosure has long been required of charities, but recently expanded to include 501(c)(6) organizations--and the NFL has been specifically listed in that category since Bart Starr led the Packers to victory over the Chiefs in Super Bowl I.
One of the reasons the NFL is crying foul is, according to lawyer Martin Gold, “We’re not a charity and we pay taxes. Therefore, I don’t think the public is subsidizing us.” Uh, not so fast. NFL teams pay taxes. The NFL is a non profit trade association that doesn’t pay taxes–and even some of the dues the teams pay to the NFL are tax deductible. Gold’s machinations are a lawyer’s Statue of Liberty; we should ignore the pump fake and keep our eyes on the ball. The teams are receiving a public benefit by participating in a tax-exempt trade association.
P.S. I had help on that second-to-last sentence. I don't speak football.
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1. Posted by Jake on August 25, 2008 @ 20:52 | Permalink
Mr. Gold clearly has not figured out that disclosure is the price of an exemption from tax. As well it should be. The idea of an organization and its senior officials enjoying an exemption from tax in the dark, so to speak, is disturbing to say the least.
2. Posted by BDG on August 26, 2008 @ 7:04 | Permalink
I actually think it's a hard question whether (c)(6) is a subsidy or not. It depends on what you think of the underlying corporate tax. For instance, there is a rule that greatly reduces the "pyramiding" of the corporate tax by making dividends paid by subsidiaries to their parents largely tax-free to the parent. If we accept that rule as a normatively appealing application of corporate tax principles, then (c)(6) is pretty much the same. The NFL isn't much different than a subsidiary with 32 shareholderes.
3. Posted by antiques on August 26, 2008 @ 9:27 | Permalink
ah yes football season is indeed back.
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