Recently I suggested some changes to higher education. One of those suggestions was that any revenue from college sports should be taxable. It occurred to me that another of my long held beliefs could help make that happen.
That belief is that no non-profit or tax-exempt organizations should be able to pay a top executive or employee more than the salary paid to the President of the United States. That salary is currently $400,000 a year. That means a place like Harvard University that pays its President a salary and compensation of about $1.7 million would lose its tax-exempt status.
The idea behind tax-exempt status was to promote a public good. Education is a public good but a place like Harvard has for a long time not been about the public good or even education - it's been about the brand of Harvard. If you are a "non-profit" and you can afford to pay your top executives millions you are a big business hiding in plain sight and under a cloak of tax-exempt status. That should end.
How does sports figure into this? In more than half of the States in the US the highest paid public employee is a coach at a State University Usually either a football or basketball coach. Nick Saban's $8.9 million salary to coach football at Alabama is well above that $400,000 salary of the President. Is there a single good reason why the revenue generated by Alabama football remains tax-exempt? I can't think of any. This isn't to pick on Alabama either. I could easily have made John Calipari's $9.3 million salary to coach basketball at the University of Kentucky my example.
The universities most likely would separate out the revenue generating sports programs into affiliated for-profit entities under my proposed change. For-profit businesses have to pay their employees. Suddenly the athletes get paid openly over the table. Pay the minimum wage for every hour spent in practice, working out, traveling or playing for a team. You'd suddenly see many states pushing for higher minimum wages to attract better prospects but that is a discussion for another day.
Anyway - that's my suggestion for the day.
Some of these schools are just sports teams that have an education program. Instapundit also had an idea wherein nonprofits must spend ~5% of their total every year on whatever it is they're supposed to be doing. Harvard with its $40B endowment is just an investment company with an education program. They should be required to do the same.
ReplyDeleteOnly problem with that is if you thought "Hollywood accounting" was ridiculous just wait to see "College accounting" or "non-profit accounting" if they had to do fiscal gymnastics to get under a certain number.
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