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hallcity
11-02-2017, 02:06 PM
The summary of the proposed GOP tax bill released today contains this language:

"...[T]he special rule that provides a charitable deduction of 80% of the amount paid for the right to purchase tickets for athletic events would be repealed."

chrishoke
11-02-2017, 02:25 PM
That's a big deal.

mgtr
11-02-2017, 03:35 PM
No matter what change you make, somebody's ox gets gored.

hallcity
11-02-2017, 03:38 PM
And there's more that would affect Duke and many other universities more generally, a 1.4% tax on the income of large university endowments (https://www.msn.com/en-us/money/markets/gop-tax-bill-packs-major-changes-for-businesses-individuals/ar-AAullec?li=BBnbfcN).

duke79
11-02-2017, 04:24 PM
And there's more that would affect Duke and many other universities more generally, a 1.4% tax on the income of large university endowments (https://www.msn.com/en-us/money/markets/gop-tax-bill-packs-major-changes-for-businesses-individuals/ar-AAullec?li=BBnbfcN).

Not sure exactly how this would work? A 1.4% annual tax on the entire value of the endowment? So a university with a $10 billion endowment would pay the federal government $140 million each year, as a "tax"? Or is it a one-time tax? This seem particularly inane to me and I'm sure many schools would just cut back on financial aid and/or raise the tuition even higher (for those parents paying the full cost)? What would this accomplish?

CrazyNotCrazie
11-02-2017, 04:45 PM
Not sure exactly how this would work? A 1.4% annual tax on the entire value of the endowment? So a university with a $10 billion endowment would pay the federal government $140 million each year, as a "tax"? Or is it a one-time tax? This seem particularly inane to me and I'm sure many schools would just cut back on financial aid and/or raise the tuition even higher (for those parents paying the full cost)? What would this accomplish?

It is on income, not the entire value. So if your $10 billion endowment earned 10% in a year (i.e. $1 billion), it would pay a tax of $14 million that year. So in this example, where the endowment had pretty decent returns, the tax is 14 basis points, which is pretty minimal. Of course, the devil is also in the details of how "income" is calculated.

left_hook_lacey
11-02-2017, 04:47 PM
The summary of the proposed GOP tax bill released today contains this language:

"...[T]he special rule that provides a charitable deduction of 80% of the amount paid for the right to purchase tickets for athletic events would be repealed."

Why completely repeal it? Why not just reduce the %?

duke79
11-02-2017, 05:07 PM
It is on income, not the entire value. So if your $10 billion endowment earned 10% in a year (i.e. $1 billion), it would pay a tax of $14 million that year. So in this example, where the endowment had pretty decent returns, the tax is 14 basis points, which is pretty minimal. Of course, the devil is also in the details of how "income" is calculated.

Thanks for clarifying. This seems almost pointless to me. Surely, it cannot raise more than a few billion dollars a year for the federal government (and only in those years when universities with large endowments have substantial returns) and we're looking at a $3.8 TRILLION dollar federal budget. This is truly not even pocket change for the Feds. And I agree with you that many schools will just "game" the system to reduce their "income" from their endowments to minimize the tax. I'm all in favor of tax reform and simplification but this proposal seems totally out of left field to me.

sagegrouse
11-02-2017, 05:10 PM
Thanks for clarifying. This seems almost pointless to me. Surely, it cannot raise more than a few billion dollars a year for the federal government (and only in those years when universities with large endowments have substantial returns) and we're looking at a $3.8 TRILLION dollar federal budget. This is truly not even pocket change for the Feds. And I agree with you that many schools will just "game" the system to reduce their "income" from their endowments to minimize the tax. I'm all in favor of tax reform and simplification but this proposal seems totally out of left field to me.

It is awful and should be opposed. I wouldn't lose sleep over it until there is some legislative action.

duke79
11-02-2017, 05:12 PM
It is awful and should be opposed. I wouldn't lose sleep over it until there is some legislative action.

Yea, I'm guessing the final tax bill, IF it is EVER passed, will look far different from what was revealed today. The next month or so will be a field day for lobbyists and various special interest groups.

johnb
11-02-2017, 05:35 PM
There are plenty of other issues in this tax plan that are going to immediately hurt affluent Duke alumni more than the tax deduction for tickets or a 1.4% tax on Duke's income.

arnie
11-02-2017, 05:51 PM
Not sure exactly how this would work? A 1.4% annual tax on the entire value of the endowment? So a university with a $10 billion endowment would pay the federal government $140 million each year, as a "tax"? Or is it a one-time tax? This seem particularly inane to me and I'm sure many schools would just cut back on financial aid and/or raise the tuition even higher (for those parents paying the full cost)? What would this accomplish?

I take the opposite view on this. If the Duke endowment was routinely depleted with massive giveaways to charities, I’d agree income shouldn’t be taxed. But it seems the purpose of the endowment is to grow it larger - gives more bragging rights to schools. I think Duke is run like a huge corporation with the ability to spend money on many capricious projects without any taxation in endowment income.

Of course I doubt this change or any changes that impact groups with large lobbies will ever pass. The entire system is rigged by lobbyists and their clients.

PackMan97
11-02-2017, 06:24 PM
No matter what change you make, somebody's ox gets gored.

...and if you are going to gore someone, this is a good place to start.

Even though I take advantage of this with my WPC donation, this is one tax deduction that I'd be OK to lose. I'm fine with taxing athletic endowements as well.

sagegrouse
11-02-2017, 06:41 PM
I take the opposite view on this. If the Duke endowment was routinely depleted with massive giveaways to charities, I’d agree income shouldn’t be taxed. But it seems the purpose of the endowment is to grow it larger - gives more bragging rights to schools. I think Duke is run like a huge corporation with the ability to spend money on many capricious projects without any taxation in endowment income.

Of course I doubt this change or any changes that impact groups with large lobbies will ever pass. The entire system is rigged by lobbyists and their clients.

The requirement for most charitable endowments is that they spend five percent of the principal every year to prevent unbounded growth. I can't remember if there is an "exception" for university endowments, but I am sure that every school has the ability (and the need) to spend five percent of its endowment.

At Duke there is a strong desire to be able to fund all scholarship from special endowment funds. Very few schools are able to do this.

Duke_92
11-02-2017, 07:02 PM
If you lose the Iron Dukes’ deduction seems like the donation required for season tickets should come down a bit. I don’t think that demand is perfectly inelastic. It would seems demand would fall and so too would the donation amount.

mattman91
11-02-2017, 07:08 PM
In before the thread gets locked.
















I've always wanted to do that :)

DevilFalcon
11-02-2017, 07:28 PM
I like the idea of keeping more of my money so I can choose how to spend it, instead of someone else telling me how I will depend it. Lower taxes in general will hopefully mean we can afford to lose a little deduction here and there. Fingers crossed.

crimsondevil
11-02-2017, 08:46 PM
I take the opposite view on this. If the Duke endowment was routinely depleted with massive giveaways to charities, I’d agree income shouldn’t be taxed. But it seems the purpose of the endowment is to grow it larger - gives more bragging rights to schools. I think Duke is run like a huge corporation with the ability to spend money on many capricious projects without any taxation in endowment income.

Of course I doubt this change or any changes that impact groups with large lobbies will ever pass. The entire system is rigged by lobbyists and their clients.


The requirement for most charitable endowments is that they spend five percent of the principal every year to prevent unbounded growth. I can't remember if there is an "exception" for university endowments, but I am sure that every school has the ability (and the need) to spend five percent of its endowment.

At Duke there is a strong desire to be able to fund all scholarship from special endowment funds. Very few schools are able to do this.

This link (https://giving.duke.edu/ways-to-give/endowment) implies that 5.5 to 5.75% of the DU endowment is spent per year. Not sure how much more "massive" you can get and expect to keep/grow your principal over time. You may recall that a lot of universities had to institute furloughs, layoffs, reduced hiring, etc. after the financial crisis, including ones with big endowments since they lost so much value. That suggests they are not sitting on big pools of money for the heck of it.

sagegrouse
11-02-2017, 09:01 PM
This link (https://giving.duke.edu/ways-to-give/endowment) implies that 5.5 to 5.75% of the DU endowment is spent per year. Not sure how much more "massive" you can get and expect to keep/grow your principal over time. You may recall that a lot of universities had to institute furloughs, layoffs, reduced hiring, etc. after the financial crisis, including ones with big endowments since they lost so much value. That suggests they are not sitting on big pools of money for the heck of it.

The Duke Forward campaign, which ended June 30 raised $3.85 billion, and even though some of the amount are pledges rather than cash, the Duke endowments funds are growing.

davekay1971
11-03-2017, 01:17 AM
Thread still open?!?!?! I'm in!

The most shocking news here to me is that you can take any charitable deduction at all on donations given in exchange for access to sports tickets. I'd love to find out which sports-crazy member of Congress slid that in the tax code once upon a time...and which college he/she was cheering for.

"Mr. Speaker, the Congressman from the University of Kentucky...er, from Kentucky...has a proposed amendment to the tax bill."

(Foghorn-Leghorn voice) "Yes I say...I say...Mr Speakah, it is imperative to the good people of Kentucky, including me, that donations to our fine athletic, er, academic institutions, which may, at times, allow donors priority for such benefits as season tickets to basketball, be given charitable status and eligible for a tax deduction."

And the SEC caucus and Texas delegations roar with approval.

Atlanta Duke
11-03-2017, 07:08 AM
Thread still open?!?!?! I'm in!

The most shocking news here to me is that you can take any charitable deduction at all on donations given in exchange for access to sports tickets. I'd love to find out which sports-crazy member of Congress slid that in the tax code once upon a time...and which college he/she was cheering for.

"Mr. Speaker, the Congressman from the University of Kentucky...er, from Kentucky...has a proposed amendment to the tax bill."

(Foghorn-Leghorn voice) "Yes I say...I say...Mr Speakah, it is imperative to the good people of Kentucky, including me, that donations to our fine athletic, er, academic institutions, which may, at times, allow donors priority for such benefits as season tickets to basketball, be given charitable status and eligible for a tax deduction."

And the SEC caucus and Texas delegations roar with approval.

You are pretty close as to what happened with the SEC and Texas references:D

The provision originally made it into the 1986 tax reform bill after being introduced by Louisiana Senator Russell Long, chairman of the Senate Finance Committee and LSU grad, and Rep. Jake Pickle, a UT grad on the House Ways and Means Committee whose district included Austin. The IRS had ruled that donations required for ticket purchases were not deductible but LSU wanted donations to expand Tiger Stadium to be tax deductible.

Senator Long said he would take care of it but didn't want the amendment to be a "rifle shot" with just one beneficiary and said find another school that would benefit to put in the amendment.

The amendment allowed LSU and UT season ticket buyers to deduct 100 percent of donations linked to their seats. It described the schools eligible for the tax break in such a way that no others could qualify...

When the identities of the two schools later became known, other colleges complained. Rather than repeal the provision, Congress voted in 1988 to extend the benefit to all of them, while reducing the deduction to 80 percent of contributions.

http://www.lockportjournal.com/football-ticket-tax-break-helps-colleges-get-millions-from-fans/article_24be9638-08b0-50d2-9c30-94ea29d62735.html

left_hook_lacey
11-03-2017, 08:48 AM
You are pretty close as to what happened with the SEC and Texas references:D

The provision originally made it into the 1986 tax reform bill after being introduced by Louisiana Senator Russell Long, chairman of the Senate Finance Committee and LSU grad, and Rep. Jake Pickle, a UT grad on the House Ways and Means Committee whose district included Austin. The IRS had ruled that donations required for ticket purchases were not deductible but LSU wanted donations to expand Tiger Stadium to be tax deductible.

Senator Long said he would take care of it but didn't want the amendment to be a "rifle shot" with just one beneficiary and said find another school that would benefit to put in the amendment.

The amendment allowed LSU and UT season ticket buyers to deduct 100 percent of donations linked to their seats. It described the schools eligible for the tax break in such a way that no others could qualify...

When the identities of the two schools later became known, other colleges complained. Rather than repeal the provision, Congress voted in 1988 to extend the benefit to all of them, while reducing the deduction to 80 percent of contributions.

http://www.lockportjournal.com/football-ticket-tax-break-helps-colleges-get-millions-from-fans/article_24be9638-08b0-50d2-9c30-94ea29d62735.html

My money says there are too many big shots with lots of money that use this tax break for this to ever get passed.

I'm with Packman, I don't have a problem it, but then again, I don't donate large chunks of money to any school. :)

davekay1971
11-03-2017, 12:12 PM
You are pretty close as to what happened with the SEC and Texas references:D

The provision originally made it into the 1986 tax reform bill after being introduced by Louisiana Senator Russell Long, chairman of the Senate Finance Committee and LSU grad, and Rep. Jake Pickle, a UT grad on the House Ways and Means Committee whose district included Austin. The IRS had ruled that donations required for ticket purchases were not deductible but LSU wanted donations to expand Tiger Stadium to be tax deductible.

Senator Long said he would take care of it but didn't want the amendment to be a "rifle shot" with just one beneficiary and said find another school that would benefit to put in the amendment.

The amendment allowed LSU and UT season ticket buyers to deduct 100 percent of donations linked to their seats. It described the schools eligible for the tax break in such a way that no others could qualify...

When the identities of the two schools later became known, other colleges complained. Rather than repeal the provision, Congress voted in 1988 to extend the benefit to all of them, while reducing the deduction to 80 percent of contributions.

http://www.lockportjournal.com/football-ticket-tax-break-helps-colleges-get-millions-from-fans/article_24be9638-08b0-50d2-9c30-94ea29d62735.html

Thank you for the info! That's awesome! I feel so happy that my shot-in-the-dark speculation wasn't far from the truth.

OZ
11-03-2017, 12:17 PM
My money says there are too many big shots with lots of money that use this tax break for this to ever get passed.

I'm with Packman, I don't have a problem it, but then again, I don't donate large chunks of money to any school. :)

Just wondering... for those who might be critical of this tax break... how many of them enjoy the fruits of those "big shots" gifts?

Mtn.Devil.91.92.01.10.15
11-03-2017, 02:48 PM
Just wondering... for those who might be critical of this tax break... how many of them enjoy the fruits of those "big shots" gifts?

Thread closing in 3... 2... 1...

brevity
11-03-2017, 03:22 PM
You are pretty close as to what happened with the SEC and Texas references:D

The provision originally made it into the 1986 tax reform bill after being introduced by Louisiana Senator Russell Long, chairman of the Senate Finance Committee and LSU grad, and Rep. Jake Pickle, a UT grad on the House Ways and Means Committee whose district included Austin. The IRS had ruled that donations required for ticket purchases were not deductible but LSU wanted donations to expand Tiger Stadium to be tax deductible.

Senator Long said he would take care of it but didn't want the amendment to be a "rifle shot" with just one beneficiary and said find another school that would benefit to put in the amendment.

The amendment allowed LSU and UT season ticket buyers to deduct 100 percent of donations linked to their seats. It described the schools eligible for the tax break in such a way that no others could qualify...

When the identities of the two schools later became known, other colleges complained. Rather than repeal the provision, Congress voted in 1988 to extend the benefit to all of them, while reducing the deduction to 80 percent of contributions.

http://www.lockportjournal.com/football-ticket-tax-break-helps-colleges-get-millions-from-fans/article_24be9638-08b0-50d2-9c30-94ea29d62735.html


Thread closing in 3... 2... 1...

Well, in that case I should quickly point out that Congress somehow managed to stop laughing long enough to pass the Long-Pickle bill.

OldPhiKap
11-03-2017, 03:43 PM
Well, in that case I should quickly point out that Congress somehow managed to stop laughing long enough to pass the Long-Pickle bill.

To be fair, the Short Pickle lobby is pretty impotent. Or so I am told.

rasputin
11-03-2017, 04:14 PM
To be fair, the Short Pickle lobby is pretty impotent. Or so I am told.

Or effective only in spurts.

budwom
11-03-2017, 04:18 PM
Irrespective of what party proposes a tax bill, the tsunami of lobbyists is sure to roar into town tearing apart proposals which adversely affect them.
Few deductions will disappear without a Texas Death Match level fight.

arnie
11-03-2017, 07:33 PM
Irrespective of what party proposes a tax bill, the tsunami of lobbyists is sure to roar into town tearing apart proposals which adversely affect them.
Few deductions will disappear without a Texas Death Match level fight.

And that’s the problem with hoping for any reasonable tax reform - and as you said, irrespective of party.

duke79
11-14-2017, 03:26 PM
You are pretty close as to what happened with the SEC and Texas references:D

The provision originally made it into the 1986 tax reform bill after being introduced by Louisiana Senator Russell Long, chairman of the Senate Finance Committee and LSU grad, and Rep. Jake Pickle, a UT grad on the House Ways and Means Committee whose district included Austin. The IRS had ruled that donations required for ticket purchases were not deductible but LSU wanted donations to expand Tiger Stadium to be tax deductible.

Senator Long said he would take care of it but didn't want the amendment to be a "rifle shot" with just one beneficiary and said find another school that would benefit to put in the amendment.

The amendment allowed LSU and UT season ticket buyers to deduct 100 percent of donations linked to their seats. It described the schools eligible for the tax break in such a way that no others could qualify...



When the identities of the two schools later became known, other colleges complained. Rather than repeal the provision, Congress voted in 1988 to extend the benefit to all of them, while reducing the deduction to 80 percent of contributions.

http://www.lockportjournal.com/football-ticket-tax-break-helps-colleges-get-millions-from-fans/article_24be9638-08b0-50d2-9c30-94ea29d62735.html

Not meaning to revive an old thread, but a good discussion on Bloomberg today of the proposal to not allow 80% tax deduction for "seat donations" along with some other suggestions. Includes a mention of Coach K.

https://www.bloomberg.com/view/articles/2017-11-14/go-ahead-republicans-tax-college-sports

hallcity
12-15-2017, 11:15 PM
This ended up in the final bill. Expect ticket prices for Cameron to soar.
https://t.co/6PoVwQzgoo

Reilly
12-16-2017, 08:15 AM
This ended up in the final bill. Expect ticket prices for Cameron to soar.
https://t.co/6PoVwQzgoo

I guess you mean the total effective price it will cost to attend a Duke game will soar? That seems possibly true if folks are willing to pay, in effect, more by virtue of not getting the tax deduction.

But from the donors'/ticket buyers' perspective, won't it be a wash as to what they are willing to pay in total?

Right now, they donate $8,000 to the Iron Dukes (while getting $6Kish tax deduction for that donation, which lowers the amount of tax they pay by $X) + (pay $X per face value ticket) x (# home games). Add all that up, and that's what they are willing to pay.

If the Iron Dukes do nothing and keep the donation levels and ticket prices at current levels, then some folks will say this (donating, buying tix) is not worth it anymore, given the now effective higher price w/out the lower tax bill. Others will bear the now-effective higher overall price.

If the Iron Dukes lower the donation levels and raise individual ticket prices to make up the lost revenue from the lower non-write-off-able donations, the buyer may be roughly in the same place.

If the Iron Dukes simply raise donation levels and raise ticket prices no matter what the tax laws provide, well, that's what the Iron Dukes do, and some people put up with it.

In short though, serious Q, I don't see how this tax law would necessarily affect the individual ticket price or affect the overall amount that someone is willing to pay for Duke hoops. I guess I see fewer donations or lesser amounts in donations to the Iron Dukes with the tax law change. And so the ID may raise individual ticket prices in an attempt to make up for the lost donations. But the end result for the buyer may not be any different (now, perhaps there will be a lower ID minimum required coupled with higher ticket face value).

weezie
12-16-2017, 08:35 AM
^^^ I agree with Reilly above. Plus, that 8k is the baseline donation for right to buy ACC Tourney tix, too. For new members, that is; some grandfathered support levels are much lower.

I don't see IDs raising donation levels more than a thousand, if at all, at least in the foreseeable future.

IDs sent a email out suggesting that members fulfill their pledges before 12/31/17 in order to get the possibly last deduction.

sagegrouse
12-16-2017, 10:06 AM
It was to benefit LSU and inserted by powerful Sen. Russell Long, head of finance committee He got an ally from Texas who was an A&M supporter

RPS
12-16-2017, 04:56 PM
Not sure exactly how this would work? A 1.4% annual tax on the entire value of the endowment? So a university with a $10 billion endowment would pay the federal government $140 million each year, as a "tax"? Or is it a one-time tax? This seem particularly inane to me and I'm sure many schools would just cut back on financial aid and/or raise the tuition even higher (for those parents paying the full cost)? What would this accomplish?It's a tax on returns and isn't insignificant. In round numbers (and from memory), Yale's endowment is $27 billion and has averaged about 13.5 percent returns over David Swensen's long tenure. So, assuming this provision sticks, it will cost Yale about $50 million dollars (and more because it keeps growing both due to more gifts and because returns generally exceed expenditures).

-jk
12-16-2017, 07:07 PM
The tax bill as applied to the Iron Dukes is relevant (tell me!). Beyond that, it's policy stuff that has no place here on a sports board.

sorry, and thanks!

-jk