Monday, January 3, 2011
From the "no-brainer (but worth saying anyway)" department: Or, "another reason why tenure is good" department: Professor Clotfelter's New Year's Eve op-ed piece in the Washington Post reminds us that taxation is ultimately about political capture or compromise, not equity and efficiency. This is not to condemn anybody. We should all be reminded every once in awhile that the "principles" that underlie our tax code are, after all is said and done, not immutable truths pulled from the sky but rather the result of power and influence. Its fun, and still necessary, to talk about efficiency and equity in tax law but law is nothing more than compromise or capture and most of us are self-serving in one way or another. But I digress. Here is an excerpt from what I must honestly say is Clotfelter's lonely plea destined to be chuckled about:
With the exception of the 80 percent rule for gifts that enable a donor to buy tickets, all these donations are subject to the same tax subsidy we reserve for charitable and educational institutions like hospitals, food pantries, arts organizations and universities. When a taxpayer at the 35 percent tax rate makes a donation of $10,000, he ends up shouldering only $6,500 of the cost, since his tax bill is trimmed by $3,500. That savings to the taxpayer amounts to reduced tax collections by the Treasury. Considering that the top college athletic programs collected a total of more than a billion dollars in 2008, the revenue hit from making these gifts tax deductible is not inconsequential. Big-time college sports is rarely mentioned in universities' published mission statements but is higher education's most thoroughly commercial activity. With the nation facing gigantic federal deficits for years to come, isn't it time for major college sports programs to get by without this subsidy?
Let's just say its a good thing Clotfelter has tenure at Duke, otherwise he might get his season ticket yanked.