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CLICK HERE to Register for a free account and login for a smoother ad-free experience. It's easy, and only takes a few moments.The NFL has announced they are giving up their tax exempt status. Too bad Senator Comcast has passed away. He could no longer threaten to do Congressional hearing every time his team or his biggest supporter were upset with the League.
The tax-exempt status isn't important. One thing it currently accomplishes, though, is that it means they no longer have to disclose Goodell's salary.
What's important is the anti-trust exemption (without which you can't have things like a draft).
The NFL doesn't avoid paying tax. The league has no profit to pay tax on because all profits are made at the team level, and the teams pay tax on them.Only giving it up because they've figured out or have been given a loophole to avoid paying any tax, along with other major corporations that not only don't pay tax, but actually receive federal subsidies.
Only giving it up because they've figured out or have been given a loophole to avoid paying any tax, along with other major corporations that not only don't pay tax, but actually receive federal subsidies.
In 2013, Oklahoma senator Tom Coburn introduced a bill that would have stripped the NFL of its tax-exempt status. It didn't succeed, but it's been followed by similar efforts in the House. And other lawmakers have used the tax-exempt status as a point of leverage in investigating the NFL's mishandling of concussions, among other issues.
Apparently, NFL commissioner Roger Goodell and team owners decided that its tax-exempt status was no longer worth it. In a Tuesday letter to Congress, he called the issue a "distraction" and said that in March, the 32 team owners had voted to shed the league's tax-exempt status.
This will cost them a bit of money: about $10 million or so per year. But at the same time, total revenues for all teams have risen to nearly $10 billion (because all but one of those teams are privately held, they don't have to publish their operating expenses and income). The teams pay a great deal in taxes, but the new taxes to be paid by the league offices are negligible.
In exchange, the NFL will get a few big benefits. For one, lawmakers can no longer hold the league's the tax-exempt status of it during hearings about unrelated issues. And it pre-empts a possible future move by Congress to strip the league of this status, which would have looked much worse to the public.
But more importantly, filing as a taxable, privately-held entity will mean that the NFL no longer has to disclose its income — or the oft-criticized salary of its commissioner, Goodell. As Andrew Brandt, an ESPN business analyst, told Bloomberg, "it seems like Congress has been making a big deal out of it. Without this status there’s no requirement to disclose, which helps in the PR battle."
Corporations are made up of both the entity and the owners (shareholders). If the corporation makes a profit and passes it all on to the shareholders, the corporation pays no tax because the shareholders pay it.Only giving it up because they've figured out or have been given a loophole to avoid paying any tax, along with other major corporations that not only don't pay tax, but actually receive federal subsidies.
Corporations are made up of both the entity and the owners (shareholders). If the corporation makes a profit and passes it all on to the shareholders, the corporation pays no tax because the shareholders pay it.
A corporation that is paying no tax because it made no profit AND distributed none to the shareholders to be taxed on, would be a corporation that is failing, and losing money, so like any other entity if it loses money, it wouldn't have anything to tax.
The issue with corporations and taxes is actually when they spend money unnecessarily that is a tax deduction. That doesn't actually hurt the IRS though, it hurts the shareholders, because otherwise it would have been distributed to them. When XYZ corp gets a box at Gillette, and is able to write it off, it isn't hurting the IRS, it is either hurting its shareholders, or (as the execs would tell you) helping the shareholders because they generate more revenue by the deals they make in the box than the box costs.
If the corporation makes a profit and passes it all on to the shareholders, the corporation pays no tax because the shareholders pay it.
The corporation would still pay taxes there. Dividends are double-taxed. They're taxed as profits and then taxed when they're distributed to the shareholder, albeit at the (reduced) capital gains rate rather than the wage rate.
Corporations are made up of both the entity and the owners (shareholders). If the corporation makes a profit and passes it all on to the shareholders, the corporation pays no tax because the shareholders pay it.
A corporation that is paying no tax because it made no profit AND distributed none to the shareholders to be taxed on, would be a corporation that is failing, and losing money, so like any other entity if it loses money, it wouldn't have anything to tax.
The issue with corporations and taxes is actually when they spend money unnecessarily that is a tax deduction. That doesn't actually hurt the IRS though, it hurts the shareholders, because otherwise it would have been distributed to them. When XYZ corp gets a box at Gillette, and is able to write it off, it isn't hurting the IRS, it is either hurting its shareholders, or (as the execs would tell you) helping the shareholders because they generate more revenue by the deals they make in the box than the box costs.
The NFL doesn't avoid paying tax. The league has no profit to pay tax on because all profits are made at the team level, and the teams pay tax on them.
The idea that the NFL benefits from being not for profit is thoroughly misunderstood.
They do but it isn't much. The vast majority of their income is already taxed at the team level.The NFL does, in fact, have taxable income.
They do but it isn't much. The vast majority of their income is already taxed at the team level.
http://www.forbes.com/sites/kurtbadenhausen/2011/12/14/the-nfl-signs-tv-deals-worth-26-billion/
Don't know about you but I don't exactly think that $27 billion (or $3b a year) "isn't much."
And that's just the TV rights.
The NFL does, in fact, have taxable income.
That money passes to the teams who pay tax on it.http://www.forbes.com/sites/kurtbadenhausen/2011/12/14/the-nfl-signs-tv-deals-worth-26-billion/
Don't know about you but I don't exactly think that $27 billion (or $3b a year) "isn't much."
And that's just the TV rights.
And virtually none of that says within the NFL "umbrella". The vast majority goes to the 32 teams.
That's why this change of status will cost the NFL very little.