26 Feb Cheap Hits
Many fans, turned off by the NFL’s 24-hour Hype-o-Matic, have turned their eyes to the college game. This is especially true for schools still paying lip service to the ideal of amateurism. Alumni and students alike thrill to classic sweatshirt-weather matchups from “The Game” between Harvard and Yale, all the way down to the “Rocking Chair Classic” between “little Ivy” rivals Hamilton and Middlebury.
This season, college programs are facing off across the neutral zone from some new patterns at the IRS. The Tax Cuts and Jobs Act of 2017 takes a handful of shots at college sports. And while it may not be the end of the professionalism creeping into college sports, it might be the end of the beginning:
- The new higher standard deductions mean millions fewer donors will be itemizing deductions. That means they won’t get to write off their donations. So far, that hasn’t affected giving: the National Philanthropic Trust reports that Americans upped their total giving by 0.7% in 2018, with 14% going to education. But when the next recession inevitably blitzes, we’ll see if losing that deduction cramps giving.
- Adding insult to injury, it used to be that boosters could deduct 80% of any gifts that included the right to buy athletic tickets. The new law tackles deductions for those gifts entirely. Motivations matter! But here’s something to ponder. The first wave of “Varsity Blues” parents who pled guilty to bribing a crooked counselor to get their underachieving kids into prestigious schools are about to go to jail for their crimes. Yet parents who give money directly to the schools to get their underachievers admitted can still deduct their gifts.
- Nonprofits owe a new 21% excise tax on salaries over $1 million they pay to their five highest-compensated employees. That’s a helmet-to-the-head hit on college sports — in 31 states, the highest-paid public employee is a college football coach. Alabama football coach Nick Saban will make $8.2 million more this year than Alabama governor Kay Ivey. (In all fairness, Saban’s probably going to have a better season.)
- There’s a new 1.4% excise tax on investment income for about two dozen private schools with endowments topping $500,000 per student. Opponents see this as a direct shot at those institutions, which have been mocked as tax-free hedge funds with universities attached. Harvard alone manages $35 billion — more than the GDP of Bahrain. (Fun fact: Harvard football has won twelve national championships, although you’ll have to go back to the leather-helmeted 1920 season for that last title).
Don’t let any of these changes keep you from enjoying the game. Your favorite schools will find ways to adjust to the new laws, just like we do. So pour yourself a crisp bourbon and cider, grab your preppiest down vest, and take up your team’s fight song. We’ll be guarding the tax line for you!