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On the EDge: Congress should punt NFL tax-exempt status

OPINION – Now that the Super Bowl is over, the pom poms have been put away, and the Lombardi Trophy has been stored appropriately in the offices of the Seattle Seahawks, it is time for the National Football League to get down to business.

Sometime today, the NFL will submit its annual filing with the Internal Revenue Service.

Among the mountain of paperwork will be a slip of paper that discloses the salary and benefits paid to NFL commissioner Roger Goodell.

What it will tell the IRS is that Goodell is one of the highest-paid executives of a nonprofit organization in the United States with a 2012 salary – the year of today’s filing – of $44.2 million.

Yeah, that’s correct on both counts. Goodell earned $44.2 million for one year’s service as the head of the NFL, which is a tax-exempt organization under section 501(c)(6) of the Internal Revenue Code, despite the fact that the NFL is a $10-billion a year business. Now, the individual teams that are a part of the NFL are not tax exempt, but they get a pretty nice break from the IRS because of the annual fees and dues they pay to support the league office.

The NFL is not the only pro sports organization with such a cushion. The National Hockey League and pro golf are also part of the club. Major League Baseball opted out of the nonprofit category several years ago when it was discovered that as far as cash flow, it was pretty much a wash.

According to a story in the New York Times, nonprofit status is typically given to groups that deliver services that private-sector companies are unwilling or unable to provide, said Ken Berger, the president and chief executive of Charity Navigator, the nation’s largest charity evaluator. The NFL stretches that definition, he said.

“The idea that a person becomes a multimillionaire running a nonprofit that is supposed to provide a service that can’t be provided by the market is absurd,” Berger told The New York Times. “The notion that every taxpayer is subsidizing an organization whose leader is making $30 million or more is a waste.”

Sen. Tom Coburn, R-Okla., is trying to change that.

Coburn is pushing for legislation that would remove the tax exemption for any sports organization that earns more than $10 million a year.

The piece of legislation, the PRO Sports Act, would remove the tax-exempt loophole for sports leagues and, as Coburn says, add some fairness to the IRS Tax Code.

“Tax earmarks are essentially tax increases for everyone who doesn’t receive the benefit,” Coburn argues. “In this case, working Americans are paying artificially high rates in order to subsidize special breaks for sports leagues.

“This is hardly fair.”

Yeah, well as most of us get ready to prepare our tax returns this year, we find little fair with the Tax Code. Instead, however, of getting ticked off at the IRS, we should point our anger elsewhere because the reality is the IRS is simply the tool the government uses to implement and enforce the Tax Code, which is legislated and written by Congress.

The 3.7-million-word document is one of the most confusing documents ever crafted and the object of ridicule and anger for decades, especially each year at this time when we struggle with filing our taxes.

Philosophically, I can understand why certain organizations deserve tax-exempt status.

There are a number of good, honest, hard-working groups that devote themselves to the public welfare, whether researching medical breakthroughs or providing assistance during catastrophic occurrences, from hurricanes to earthquakes.

Churches are another matter.

Under provisions in the Tax Code, churches pretty much have a zero tax bill as long as they live up to a few simple rules, which is fine. But, when they cross the line and start donating to political causes or give aid in manpower to persuade the government and voters to adopt a certain theological perspective as law, they should have their tax-exempt status revoked.

For example, if a church participates in a political run for office by encouraging voters to cast ballots a certain way, they should lose their exemption.

If they donate to one side of a ballot issue to persuade voters, they should lose their tax exemption.

If they hire a lobbyist, they should lose their exemption.

The same holds true for organizations, whether the NFL or American Red Cross.

And, according to OpenSecrets.org, a website that publishes reports on who has donated to each politician and which groups have hired lobbyists, the NFL paid out $1.9 million last year alone to lobbyists engaged in advancing legislation that benefits the league.

Coburn says if his bill is passed, it could generate about $90 million a year from the NFL and NHL alone. Now, that may seem like small potatoes when we talk about a federal deficit that registers in billions – until recently, it has been trillions – of dollars, but if these two sports leagues could pony up about $90 million a year in tax revenue, what would the overall impact be if, indeed, the provisions of the Tax Code were enforced universally? It would certainly put a dent in what the nation owes and lower the cost of goods by forcing nonprofit and profit agencies to pay their leaders what they are worth instead of these outrageously inflated salaries.

It would also narrow the embarrassing chasm between what high-paid CEOs are paid and what the average working man and woman earns.

Roger Goodell has done some very good things for the NFL.

He has guided it through some tough negotiations with the player’s union and a legal hornet’s nest of a lawsuit that saw about 5,000 former players sue the league for hiding the seriousness of concussion injuries. He has landed lucrative TV deals from the networks and has enhanced the league’s presence and image overseas.

But, is he worth $44.2 million a year?

Is any CEO or corporate honcho worth $44.2 million a year?

As they used to say in a popular NFL promo, you make the call.

No bad days!

 

Ed Kociela is an opinion columnist. The opinions stated in this article are his and not representative of St. George News.

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Email: edkociela.mx@gmail.com

Twitter: @STGnews, @EdKociela

Copyright St. George News, SaintGeorgeUtah.com LLC, 2014, all rights reserved.

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  3 Comments
  1. Bub February 18, 2014 at 3:33 pm · Reply

    Since we’re talking about churches… I still don’t get why folks pay the tithing to a Church that is really just a corporation. Take a look at LDS inc’s massive corporate holdings and decide then if they really need your 10%. And yeah these non-profits need to have capped salaries. And all churches that act like businesses should be paying taxes. Separation of church and state should mean they lose their special treatment and have to pay taxes like any other business. The fact that churches are tax exempt is not separation but IS special treatment under the law.

    • Bub's evil twin February 18, 2014 at 9:24 pm · Reply

      The LDS Church’s business entities are taxed like every other business my brother. I agree with Ed on the NFL.

  2. Sagemoon February 19, 2014 at 8:52 am · Reply

    Whoa, wait a second. The NFL and other sports leagues don’t pay taxes? You’ve got to be f’n kidding me. I had no idea. Thanks for enlightening me, Ed.

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