Here’s a recent story from the Chicago Tribune that jumped off the page when I read it. Northwestern University is finishing up the construction of a new $800 million football stadium. This is supposedly a nonprofit “educational” entity.
Uh-huh.
Northwestern — an “institution of higher learning” located outside of Chicago — is flush with cash. It has an endowment of nearly $15 billion, and the tax-free donations keep flowing in.
Almost all the $800 million — which rivals the cost of professional sports arenas with luxury skyboxes and opulent decor — for the lavish Taj Mahal football stadium on the shores of Lake Michigan was donated to the school with tax-deductible dollars. About half the money came from multibillionaire Pat Ryan. No word yet as to whether the Northwestern stadium will come with hot tubs in the end zones.
Meanwhile, universities are now paying star football players millions of dollars thanks to the new “portal” rules. Many basketball and football athletes are now selling their passing, tackling and dunking skills each year to the highest bidder. They can often make more money playing for the old U than if they played in professional leagues like the NFL or NBA.
This is pay-to-play athletics. It won’t be long before women on college volleyball teams are pay-to-play. Star athletes have been exploited by colleges for years, and now they are getting their just dues.
Don’t get me wrong. I love college sports and will be riveted to the Indiana-Miami college football national championship. This is a great product, and we are seeing the best teams money can buy.
But when will Congress stop buying into this mythology that colleges are nonprofit organizations? Why should donations from millionaires and billionaires be IRS tax write-offs? It’s farcical.
It also costs taxpayers a small fortune. Northwestern’s donors will get tax deductions worth almost $200 million.
This makes as much sense as allowing the Chicago Bears to sign the best quarterback and free safety tax-free.
Don’t forget that universities have other absurd tax advantages. They generally are exempt from property taxes — which means the rest of us pay more.
Universities are supposed to be educational institutions, not semipro leagues. To treat them in the tax code as if they were the equivalent of homeless shelters, food banks and the Salvation Army is a fantasy.
Universities are big business. The “amateur student athletes” are de facto professionals. Many rarely if ever attend a class. Some of them are 25 and 26 years old.
The cost to the Treasury of the tax loophole for colleges is enormous. Colleges have a combined endowment today of nearly $1 trillion. Almost none of this money was ever taxed. These government subsidies to universities are on top of the trillion dollars of student loan subsidies — debts many of which will never be paid back by the former students.
If this giant loophole were plugged, tax rates for families and legitimate businesses could fall by 10% to 15%.
When I attended the University of Illinois, we used to joke that our school motto was: We never let academics stand in the way of a winning football team and basketball team.
Now the universities don’t let money stand in the way of a great team either. And the federal tax code encourages the “best team money can buy” mentality.
Let’s face it. If an institution can spend $800 million on a football stadium, it can afford to pay its fair share of taxes.
Stephen Moore is a former Trump senior economic adviser and the cofounder of Unleash Prosperity, which advocates for education freedom for all children.
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College is the biggest SCAM on the American People ever created. If I had kids they would have been encouraged to go to trade school, where they’d actually learn something.
Follow the money, tax exemptions are always granted by politicians in backrooms. That amount of money is too obscene to be getting a tax exemption, common people should be so lucky.
Just look at what they spew out and we pay for it.
College tuition inflation has out paced the inflation rates of any other products or industry including medicine and hospitals. Much of the blame goes to government sponsored student loans which all of the colleges took advantage of and saw as a gold mine. Many colleges did away with entrance exams and minimum requirements. If you had the money, they would take it and let you major in ice cream appreciation or any other useless major you wanted. Colleges should be forced to pay back a large portion of defaulted student loans.
And a surcharge for the sports program is still part of a student’s tuition. It should be the other way around. If the college is making money off of sports, it should be used to lower tuition.
Why anyone would support college “athletics” is beyond me. These so-called institutions of higher learning are a joke. All they produce are useful idiots with skulls full of mush who do nothing more than spew hatred for anyone who disagrees with them. No student loans should be subsidized for nonsense majors. The only majors that should be supported are those in health care (NOT health care administration, just the boots on the ground), hard science (NOT nonsense like psychology and gender studies), mathematics, and engineering. The rest should be on the dime of the “student”. Why anyone would support the idea of paying someone to play a game is mystifyiing. Would the money paid to these spoiled brats be better spent on improving the health and well being of the population. But that will never happen as long as people are addicted to the bread and circuses put forward to “entertain” them. The parallels to the fall of the Roman empire are obvious.
Another insurmountable and astronomical amount of WASTE FRAUD AND ABUSE can be found in 99.9% of universities and to possibly to a lesser extent, colleges. ANY college or university receiving Federal taxpayer dollars should be independently audited at LEAST BI-ANNUALLY. Fraudsters to be tried and awarded long prison terms.
The collegiate sports in this country are being ruined by all of the money that is being paid to the schools and now the student athletes!! It was enough for a good athlete to get a free ride to a good school where they even had tutors that helped them pass classes. Now they get paid millions to move around to a different school as often as they please. And do not even get me started on the betting that is available everywhere and is encouraging people to bet by giving them money to begin with! Money is the root of all evil because when it overtakes a society, it changes their morality. We are will on our way to becoming the same type of society that killed Rome.
I do not understand the “why’s and how’s” of schools and churches not beings taxed on income above and beyond operating costs. Especially property taxes and other non-income sources like the rest of us. If they don’t profit too much, they don’t pay too much.
It is time for Congress to revise the tax code as it relates to not-for-profits and what types of income is tax-exempt.
Everything in the article true, and needed to be said. You could have written a volume treatise and not completely covered the snake pit higher education has become.
Nobody even mentioned the ghastly huge salaries and benefits paid to the administration and “profs” who teach only a few hours a day. In some colleges, the athletic coaches are paid millions! How many university and college presidents are given “executive mansions” to live in?
Not a sport fan or a big fan of college either so I don’t support their “nonprofit” status. Of course as you can see I am more than a bit biased so!