Wednesday, April 04, 2007

The Clock Clicks Down on Breaktime

Big time college athletics programs are given tax-exempt status ostensively because they further the educational mission of the schools. This is just plain laughable and some people, such as Senator Chuck Grassley (R-Iowa), have taken notice.

Fueling the salary race [of big time college coaches] are favorable tax laws that permit donors to write off 80 percent of contributions to their favorite college athletic program -- such as the $165 million oilman Boone Pickens gave Oklahoma State in 2006.

Those laws, however, might not last forever. Sen. Chuck Grassley, the Iowa Republican who is the ranking member of the Senate Finance Committee, said in a statement sent by his office to The News on Tuesday that he is looking into donations tied to premium tickets as part of a review of higher-education tax breaks and why they aren't working to keep tuition affordable.

In testimony before Grassley's committee, Michigan president emeritus James Duderstadt said some of the tax benefits enjoyed by colleges have drifted far from the tax-exempt purpose of education, and are fueling "an arms race" in college sports.

He cited the "perverse treatment of intercollegiate athletics, in which mandatory fees for athletic events such as luxury skybox leases and licenses to purchase season tickets are treated, in part, as charitable contributions by the current tax code."

[University of Michigan's Athletic Director Bill] Martin said he foresees no anti-trust curtailment of college sports' tax-exempt status.

"I don't think that's going to happen, nor do I think it should happen," he said. "We are a market economy, and that's where we are.

According to Martin a tax break which distorts the market for college coaches will not be withdrawn because college sports operates in a market economy.  Either  this is a breath taking example of poor reasoning skills or the market economy he refers to is the market for buying off Senators and Congressmen.

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