A few days old but still newsworthy, as it may be the first new tax in modern American history to be proposed by Senate Republicans.
Well, one Senate Republican.
Who represents a state that dominates college basketball, weirdly enough.
If college athletes are going to make money off their likenesses while in school, their scholarships should be treated like income. I’ll be introducing legislation that subjects scholarships given to athletes who choose to “cash in” to income taxes. https://t.co/H7jXC0dNls
— Richard Burr (@SenatorBurr) October 29, 2019
The new NCAA rule is a compromise between those who believe student-athletes are amply compensated by the scholarships they receive and those who believe student-athletes produce so much revenue for the NCAA and their respective schools (at least the Division I elite in football and basketball) that it’s only fair to pay them. We’re not going to pay them, says the NCAA, clutching piles of thousand-dollar bills to its breast, but we’ll let them start earning their own cash from endorsement deals. If Nike wants to sign the next Zion Williamson while he’s still at Duke and start shoveling money at him, go for it.
Obviously the new rule will affect only a tiny sliver of student-athletes, the sort of budding NBA and NFL superstars who are likely to be playing on national television for their school regularly. Student-athletes a notch below those guys might earn local endorsement deals as stars on their teams but won’t see megabucks. Which raises a question: Why is Richard Burr so bothered by this extremely niche issue that he’d take the extraordinary step as a Republican of floating a tax over it? A tax, let me stress, on the value of the student-athlete’s scholarship, not on the endorsement earnings. It goes without saying that any endorsement money earned will be taxed like any other income would under existing law. What Burr wants is to start treating the scholarship as additional income once a student-athlete begins licensing his name.
It’d be one thing if athletic scholarships were based partly on need. Then you might reason that as an athlete’s ability to pay his own way increases, his right to a tax-free tuition-free ride at school decreases. Even if the school wants to continue his free ride in the interest of keeping him happy as he’s raking in endorsement cash, Uncle Sam might decide to start taking a cut of the value of that now-unnecessary scholarship. But athletic scholarships aren’t based on need, they’re based on merit. If the federal government sees fit not to tax the athletic scholarship of a student whose parents could afford to foot the tuition bill if they had too, why should an athlete who’s suddenly rich from licensing his image be treated differently?
And why shouldn’t merit scholarships awarded for reasons other than athletics also be taxed if a student with one of those scholarships starts earning money on the side? It’d be one thing if Burr wanted to start assessing all scholarships as taxable depending upon each individual recipient’s actual financial need, but that’s not what’s on the table.
You might argue that there’s a special cause-and-effect relationship in the case of athletic scholarships and endorsement deals. The athlete with a rich family wasn’t significantly enriched by his scholarship, after all; the athlete who earns $10 million from Nike because Duke gave him a scholarship, giving him a chance to play on national TV and be touted as the next LeBron, sort of was. But again, why isn’t it sufficient to tax that $10 million instead of coming after the value of the scholarship too? There’s something punitive in Burr wanting to convert a tax-free gift to a kid from a school into taxable income just because the public takes an outsized interest in that kid’s talent.
The disparate treatment that would result among different athletes is intuitively incoherent too. Says a writer at Forbes, “Such external [endorsement] contracts should have no bearing on whether playing for your school’s football team counts as ‘work.’ If one player lands an outside endorsement deal and another one does not, the tax code would treat those two individuals differently under Burr’s plan.” Right — if you prefer to view scholarships not as gifts but as compensation to athletes, why should the value of their labor be taxable or not depending on what the athlete does on the side?
It’s rare in right-wing media for writers to identify racial subtexts in Republican policy proposals, partly because it’s often baseless and partly because the left is so over-eager to do so. But both Erielle Davidson at the Federalist and Tim Miller at the Bulwark can’t help but find it strange that a rule change that would mainly benefit a group of mostly black working-class student-athletes has somehow motivated a prominent Republican to start thinking about new taxes. Miller is especially sharp in using polls to contextualize the racial politics here: Various surveys show that blacks support paying student-athletes while whites are chilly to the idea. He sees Burr’s initiative as in keeping with the spirit of Trump-era white identity politics, where job one is owning the libs and the various demographic tribes that support them:
First, the debate came to a head this year because of California’s decision to enact a Fair Pay for Play act. Because the law originated in liberal California, obviously, it must be a bad thing and opposing it has the virtue of making the libs angry.
Also, it was supported by famous athletes such Lebron James. Who is liberal, black, and a celebrity elite. Strike two.
And finally, the act will overwhelmingly benefit the people of color who make up a disproportionate share of the athletes in revenue sports. Strike three.
But there’s more. Burr is playing to the conservative sports fan with student loan debt who didn’t have the ability to earn an athletic scholarship whose grievance is against “them”—the kids who are now getting greedy and trying to make a buck when they should be grateful just for this high-class education “we’re” giving them.
The most benign explanation is that Burr and supporters of the tax simply believe ardently that student-athletes should remain truly students, not “labor,” and that letting them monetize a scholarship via endorsement deals means that the scholarship should be treated as wages. But that ideal of amateurism is laughable, as Miller points out, given the oceans of cash that flow not just to the NCAA and universities but to the coaches that profit exorbitantly from the success of their student-athletes. If elite college athletics is ultimately about developing young minds and preparing them for a lifetime of learning, why does Mike Krzyzewski need to earn $9 million a year? Actually, that’s a bad example; Duke is a private university and can pay what it likes. A better example would be Nick Saban, who enjoys the distinction of being the highest-paid public employee in the United States, a man who earns nearly 28 times in salary what the president does. Why are the taxpayers of Alabama dropping that sort of coin on him if the athletes’ education is paramount? No one’s suggesting any “exotic new taxation schemes” to squeeze coaches who are getting rich off the public dime, Miller notes. Why not?
Anyway, until other Republican senators sign on, this isn’t a bad “Republican idea,” it’s a bad Richard Burr idea. He won’t draw much support for it from his colleagues. I think?