Rep. Andy Barr loves to cheer on the University of Kentucky. He was born in Lexington, went to law school there, and represents it now. He has bet bourbon on the Wildcats during March Madness. He once called himself a “die-hard member of the Big Blue Nation,” and his district “home to the greatest tradition in the history of college basketball.” This fall, he coauthored a bill honoring the Naismith Memorial Basketball Hall of Fame with a commemorative coin in 2020.
Barr knows that his football team beat Vanderbilt’s on Saturday, telling a reporter and Commodore alumnus, “Sorry about your loss on Saturday.” And of course, he knows Kentucky was playing Kansas in a big basketball game on Tuesday night. The question is whether texting Coach John Calipari “good luck” would bother him on game day.
So when the House introduced a tax bill that would take away a deduction for college-sports nuts like himself, you’d expect Barr to huddle with Kentucky Athletic Director Mitch Barnhart, as the congressman said he did on a recent plane ride back to Lexington. But even Barr isn’t convinced that the write-off is necessary.
“I understand why they want to preserve the deduction; I get that,” Barr said in an interview. “But more Americans are going to be keeping more of their paychecks, and their paychecks are going to be growing.”
“That means that more families are going to be able to afford to take advantage of entertainment opportunities like college athletics,” he added.
The provision troubling mighty athletic departments—the ones with football coaches who are better paid than their presidents—would eliminate an 80 percent deduction for money paid in exchange for rights to purchase tickets at a college game.
But even sports fanatics in Congress say the deduction is a prime example of why tax reform is necessary, to simplify a tax code riddled with loopholes that affect narrow constituencies—say, football fans—rather than the public.
Andrew Zimbalist, an economics professor at Smith College, says the tax deduction is “ridiculous.”
“At the end of the day, the federal government is giving a subsidy to [Louisiana State University] football, Alabama football, or Notre Dame football—or whatever it is,” said Zimbalist. “I can’t think of any reason to do that; there are a million other things that are more beneficial for the government to be doing.”
Some public universities say it would curtail the millions of dollars they receive in donations, since donors would be less inclined to pay for access to buy those seats at the 50-yard line if they can’t write it off from their taxes.
Overall, Congress expects to raise about $1.9 billion in tax revenue over 10 years by getting rid of the deduction—a tiny amount for a bill that will cost about $1.5 trillion. But it’ll directly affect many major college-athletic programs. Students could face higher fees that pay for such programs, which could become more reliant on university funding, according to some opponents of eliminating the deduction.
While no one knows how many people would stop contributing money, universities do know how much people already contribute. The University of Florida has received $32 million in such contributions, according to Janine Sikes, its assistant vice president for public affairs. In addition to the $37.3 million generated in ticket sales, the University of Texas athletic department generated $32.5 million from “suite and seat-license contributions” during the 2015-16 athletic year, according to the Austin American-Statesman.
For LSU, a “conservative” percentage decline in donations could “mean anywhere between a $3 and $12 million loss per year" for school athletics, according to a university official. He added that the LSU athletic department pays full in-state and out-of-state tuition for scholarship athletes, “does not take one penny of taxpayer dollars or student fees,” and has contributed nearly $50 million to the university in the past five years.
“The incentive this tax deduction provides on donations toward tickets to sporting events is a big reason why this self-sufficiency is possible,” said the LSU official. “We do not currently have a revenue source and/or immediate cuts that could account for that loss in such a short period of time.”
Since the House is expected to pass its tax bill this week, some members are looking to the ultimate negotiations with the Senate, which is also including a provision eliminating the deduction. Barr said he is helping the University of Kentucky “register” its concerns with Sens. Mitch McConnell and Rand Paul, even though he believes that the tax bill is good for college athletics, whether that write-off stays in or not.
Like Barr, House Majority Whip Steve Scalise is another sports nut. He now drives a scooter with a LSU Tigers sticker on it as he recovers from a gunshot wound suffered while practicing for the annual congressional baseball game. Yet even Scalise is fine with taking away the deduction for the college-sports fan in the pursuit of lower tax rates and higher growth for the broader public.
“The point of this legislation is to cut taxes for working Americans and grow our economy so people can keep more of their own money in their pockets—money they can use for anything they want, whether that’s saving for the future, home improvements, a family vacation, seats at football games, or whatever else they choose,” said Chris Bond, Scalise’s spokesman. “Cutting taxes to spur economic growth and create good jobs is what this bill is all about, and Whip Scalise is looking forward to a good vote on the House floor later this week.”