United States Senator Tom Coburn, Oklahoma Republican, has begun a push to end the non-profit status of the National Football League and other professional sports organizations.
Coburn originally offered an amendment to the Marketplace Fairness Act in early 2013. The amendment would have closed the tax loophole that allows the NFL to register as a non-profit organization. That bill passed the Senate but Coburn’s amendment never got a vote. In September he sponsored a standalone bill. That bill, called the Properly Reducing Overexemptions for Sports Act (PRO Sports Act) originally struggled to find a co-sponsor, but Maine Independent Senator Angus King has now joined the fight.
King and Coburn recently appeared on CNN’s “New Day” to make their case.
“This is a directed tax cut that [went] to the league office which means every other American pays a little bit more every year because we give the NFL league office a tax break and call them a non-profit,” Coburn said on the show.
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Internal Revenue Service section 501(c)(6) grants the tax break to those "business leagues, chambers of commerce, real estate boards, boards of trade, or professional football leagues.” The language for football leagues was added to the tax code in 1966 as part of an antitrust exemption that allowed the merger of AFL and NFL.
Under Coburn’s bill the National Hockey League would also lose its non-profit status. Coburn estimates that the change to the status of the NHL and the NFL alone would “generate at least $91 million of federal revenue every year.” The Joint Committee on Taxation reported the number would be more in the range of $109 million over 10 years. Major League Baseball dropped its non-profit status in 2008 and reported that the change was tax-neutral.
But some, like Steve Stanek of the Heartland Institute, believes the loophole should be closed as a matter of principal even if it does not bring in more federal money.
"Tax exemptions like this one are corporate welfare and government cronyism," he said in his organization’s “Budget and Tax News” publication. "Good tax policy would end them.”
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Stanek added, “It was granted to give the NFL a boost. Now we have the absurdity of a pro sports league, owned by multimillionaires and multibillionaires, most of whose workers are paid hundreds of thousands and millions of dollars a year, bringing in billions of dollars and calling itself a nonprofit."