Congress May Tax College Sports

The Economist reports:

As it scours the economy for new sources of revenue, the CBO is exploring options to tax university sports franchises. University activities tend to be tax-free, yet college sports provide a non-trivial amount of revenue. The report offers three ways to tax sports: limiting deductions on charitable contributions to athletic programmes, limiting the use of tax-exempt bonds, and limiting the exemption from income taxation for these activities.

The first idea has some merit. Donors to college athletic programmes get priority to purchase season tickets. Bigger or frequent contributions entitle donors to better tickets. Many fans bcome donors for this reason alone, so the donation is effectively part of the purchase price. But because it counts as a charitable contribution it is also 80% tax exempt. The demand for tickets for die-hard fans is probably fairly inelastic, so this may be good source of tax revenue.

They might eventually tax endowments.