TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, February 12, 2013

Four Sports Taxes Are Bleeding America Dry

Salon:  The Sports-Industrial Complex Is Bleeding America Dry, by David Sirota:

Sports Tax is the most accurate catch-all label for the four sets of levies the public is being made to shell out.

The first Sports Tax comes from the higher taxes we all pay in order to fund direct handouts. Just as NFL owners convinced Louisiana politicians to give them that $5 million taxpayer subsidy, similar collusions between team owners and lawmakers have been forcing taxpayers everywhere to do much the same. ...

The second Sports Tax comes in the form of a rigged tax code, which effectively compels honest taxpayers to bankroll professional teams. As Republican Sen. Tom Coburn detailed in a report last year, the NFL, NHL, PGA (among others) use special provisions in that code “to exempt themselves from federal income taxes on earnings.” ...

The third Sports Tax is embedded in your cable television bill. Though this levy is not itemized on your bill, the Los Angeles Times reports that up to half of your total cable payment is “for the sports channels packaged into most services.” ...

The final Sports Tax hits you two ways: First when your annual taxes go to support higher education and then when you or your kids pay ever-higher tuition rates. In both situations, your cash is typically subsidizing large schools’ sprawling athletic departments. That’s right – thanks in part to multi-million-dollar coaching salaries, 93% of those departments bring in less money than they spend, meaning you are paying a Sports Tax to make up the difference. ...

But being a fan doesn’t mean one must see the Sports Tax as acceptable. It is anything but. In most cases, it is a rip off, and even in the best circumstances, it has become an unaffordable extravagance. After all, even the most die-hard fan should be able to admit that while games are important, they are not more significant than other priorities that we are shortchanging.

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The most shocking item has to be the third item. I just find it ridiculous that part of my cable bill is for the sports channels. Next your going to tell me part of my cable bill relates to the other channels I get too! The worst part is, I'm definitely forced to buy cable. I definitely don't have the option of just not having it. I'm outraged!!

Posted by: the real anon | Feb 12, 2013 10:18:57 AM

Tabarrok at Marginal Revolution explained the mistaken thinking in the myth that cable subscribers are paying for sports.

Short version: the money paid for sports channels is a huge portion of cable subscription fees, but that doesn't mean that we are all paying for sports. Simply counting total fees doesn't equate to price, and he explains that.

Given the rise of electronic distribution of entertainment, calling for a la carte cable is a bit like advocating a rate schedule for horse-drawn carriage rides.

It's also not a tax except in the sense that any use of resources is a tax. Which is meaningless.

Posted by: NL7 | Feb 12, 2013 3:11:15 PM