Ultra Elite Americans Face Painful Hit as Trump to Ax Insane Tax Break That Never Should Have Existed
The article discusses the federal governmentS plan to eliminate tax breaks for billionaire sports team owners, a move announced by the Trump management. It criticizes the long-standing practice of the federal tax code benefiting sports franchises,which allows owners to amortize their initial investment over time,similar to other businesses.Though, sports teams are treated differently due to the ability to write down the value of intangible assets like TV deals and player rosters, which typically appreciate rather than depreciate. Tax attorney Eric Nemeth points out that owning a sports team is a privilege of the wealthy, as some owners have net worths exceeding $20 billion. The article argues that ending these tax loopholes is a step toward fairer taxation and reflects an essential reform that should have occurred long ago.While the potential revenue impact is estimated to be modest, proponents see it as a necessary change to curb wasteful benefits for the elite.
It’s bad enough when city and state governments step in to subsidize professional sports teams.
However, when the federal government is doing it — and doing it through the federal tax code — that’s even more indefensible.
And, according to President Donald Trump’s administration, that’s about to be coming to a swift end.
According to Bloomberg, the administration said last week that it would move to “eliminate all special tax breaks for billionaire sports team owners,” per the words of White House Press Secretary Karoline Leavitt.
The main way in which federal tax laws benefit those who buy sports teams has to do with the fact that tax laws treat them much like any other form of corporation, even as the ways they operate are completely different.
“The main perks of ownership come from Internal Revenue Service rules that let buyers of sports franchises write down the value of their initial investments over 15 years,” Bloomberg noted.
“Similar rules apply to other businesses: Buyers of factory equipment, for example, can lower their tax bills by deducting their purchase costs over time,” the outlet added.
“A key difference with sports franchises, however, is the ability to write down a team’s intangible assets, like its TV deals and player rosters, that are unlikely to lose value in the future.”
In fact, those things are likely to appreciate or be refreshed, in the case of rosters, meaning there’s no depreciation.
Unless, of course, you’re the Cleveland Browns and you signed Deshaun Watson to an insane fully guaranteed contract, but the tax code doesn’t exist to bail out rich idiots. I digress.
Eric Nemeth, tax attorney and partner at the Varnum law firm, stated the blindingly obvious.
“You don’t buy a sports team and hope to become wealthy; you’re a wealthy person and you buy a sports team,” Nemeth told Bloomberg.
“It’s an elite club.”
Elite enough that at least six American pro sports owners have a net worth over $20 billion, according to the Salt Lake City Deseret News.
Steve Ballmer, owner of the Los Angeles Clippers and the man behind this glorious viral clip during his time at Microsoft, tops the list at $123 billion.
The key to success?
Developers.
Imagine. Create. Invent.
Go build.⁰⁰Steve Ballmer, former CEO, Microsoft.
— Brian Solis (@briansolis) February 10, 2024
Rob Walton and his family, owners of the Denver Broncos, are second at $94.3 billion. It’s a fall-off to Daniel Gilbert of the Cleveland Cavaliers at $33.1 billion, then Miriam Adelson and her family of the Dallas Mavericks at $29.8 billion, then Steve Cohen of the New York Mets and David Tepper of the Carolina Panthers at $21.3 billion.
This isn’t soaking the rich, mind you. It’s merely looking at a wasteful tax loophole that shouldn’t exist.
We conservatives want taxes to be fair, the same as everyone else — and although the definition of “fair” might be different, I think we can all agree: This sounds egregiously unfair to everybody.
This is the simple stuff that governments should be doing (auditing USAID is another one that comes to mind) but don’t usually get around to because “soak the rich” sounds a lot better, at least if you’re a Democrat.
However, this is the kind of action that eventually makes a difference. An administration should start at the bottom and work its way up.
Treating pro sports as if it were a normal business — where machinery and computers wear out and depreciate — is ludicrous. It needs to stop.
Will the impact be small? Yes.
“Garrett Watson, director of policy analysis at the conservative Tax Foundation, estimates limiting deductions would have a relatively small effect. Over a decade, such a provision could raise from as little as hundreds of millions of dollars to at most a sum in the ‘low billions,’” according to Bloomberg.
It’s something as opposed to nothing, but it’s something that should have happened a long time ago. Those are two things we should hope to hear from this administration frequently over the next few months.
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