Every organization that pays a salary of more than $1 million per year to any of its top five earning employers will face a stiff new 21 percent excise tax. That means any nonprofit-designated charity, college, and hospital that routinely asks us for donations, or charges expensive tuition or medical bills will have to justify paying those high salaries against a hefty new tax.
College football head coach salaries. No fewer than 78 of them currently make more than $1 million per year, led by the University of Alabama's Nick Saban at more than $11 million per year.
Please keep this non-political, as this is something that relates to College Football.
Forums:
DISCLAIMER: Forum topics may not have been written or edited by The Key Play staff.
Comments
the almighty dollar has ruled the CFB playing field for a long long time, and this will only serve to further highlight that.
It's not only going to impact those coaches it will impact donations as well. From a recent Hokie club email (emphasis added):
This is what's going to impact hundreds of thousands if not a million people. Donations not being taxed deductible. I expect a healthy outcry when that little tidbit get realized by a lot of people in ge Midwest and South.
The bigger factor is that the increase in the standard deduction will mean millions of people will find it's no longer worthwhile to itemize their deductions, and if you're not itemizing you are not getting charitable deductions anyway.. so even non-ticket related donations are going to be more 'expensive'
*edited to keep the focus on football/athletics
Seems that this would affect the universities with the most donors the most. Will be interesting.
Do you donate because it's tax deductible? If it isn't, will you still contribute? I've always wondered about taxpayers essentially subsidizing football tickets.
One would think the entire arms race will take a hit.
On a higher level, though, is it right for taxpayers to subsidize non-profits who can afford to pay multi-million dollar salaries? Seems like the natural response would be to organize a non-profit just to pay the salaries, separate from the nonprofit itself.
Assuming your donations put you over the threshold greater than the standard deductible in the first place.
I've never donated to get s tax write off. doesn't make sense if you think about it since you're only getting that tax percentage back. That and, you know, giving to people is nice.
From the article:
Seems like this will affect ALL major NCAA programs.
How will this be implemented and enforced? How will turbotax handle it?
Will it affect my donation, since I don't get tickets? Will it affect the number of people who buy tickets?
Will be an interesting topic.
Yea the people at turbo tax are about to be slammed with trying to update their software
RETURN FREE FILING!
I don't think it will have as big an impact as it may seem. The majority of those donating will see tax savings higher than the value of the deduction of their donation.
I think the point is that the impact on people's taxes won't serve as an incentive or justification.
For some guys it might have been easier to sell to the wife when you got a tax break on the donation.
It doesn't really matter, and really never did. It was more of a psychological factor. You just felt like your money was going further. With regards to ticket purchases, it was.
People who can do math, or who understand how the charitable donations affect your taxes, don't donate because of tax breaks, though. They donate out generosity.
Why?
I said this when all of this was bantered about a few months ago, and I'll say it again -- it makes no sense to donate $1000 to a charity or a university in order to save $250 on your taxes, because you still spent $750.
I get what your point is about the husband trying to sell the wife and the psychological factor, it's just a shame there are people who have convinced themselves to do it to "save money" when they actually aren't.
Well, yes and no.
You don't really save money if it's tax deductible, it's true.
UNLESS you're buying season tickets and there's a minimum contribution, or UNLESS you've got a fixed amount in your head that you wish to donate. In those cases, your donation has essentially been subsidized (if you itemized), as you didn't pay taxes on the amount you donated . That amount you donated was being subsidized by the tax system. So if you were in the 25% tax bracket, you were really donating 25% less than you wrote the check for, as that 25% was coming out of the national treasury, who would get that part if you didn't donate it. I put all that in the past tense, as many people will now be covered under the increased standardized deduction.
So in your example, you got $1000 of donations "credit" for $750. If you were going to donate $1,000, you "saved" $250 if it was tax deductible.
Which still makes no mathematical sense.
"Hi, I just spent $1000 so I could save $250 on my taxes."
I'd rather just spend the extra $250 on my taxes if the argument is "if we do X, we save Y on taxes" because then I still have that other $750 to do whatever with.
My argument (and Dave Ramsey's) is you give to give, saving on your taxes is just a side benefit of the giving.
The saving on the taxes is really a benefit for the charity not for the donor. People can afford to donate more if the donation comes out pre-tax.
As a tax preparer and someone who knows more about the tax code than the average citizen, I have always had a problem with deducting ANY portion of a "donation" which is required in order to obtain a product or service. If getting your hands on a pair of $400 season tickets means you ALSO have to give $600 to the Hokie Club, then your tickets don't cost $400, they cost $1,000., and none of that is tax deductible. That's just the way the code has always read. Somewhere along the way, somebody determined that the Hokie Club could tell you 80% of your contribution was deductible and it magically would be so, and it became acceptable, but it never made sense.
Pfffft. Like I would trust someone with the account name Hokie CPA to tell me about tax codes....
I donate to a local charity down here and get tickets to events they host. How is that any different? People can also just buy the tickets if they want to.
If the tickets are available without making a donation, then they have a value. If your donation is more than the value of the ticket, then you can deduct the difference.
The season ticket dilemma is different in that, in many cases, the donation is required in order to gain access to the season ticket package. No HC donation, no season tickets. It that specific case, the required donation becomes an additional cost of the season ticket package. Now, if the tickets you're buying requires a $500 HC donation, but you give $750 to the HC, then you can deduct the $250 difference.
so if I buy no tickets, I can deduct my full Hokie club donation in 2018?
The first question, of course, is will you do better under the standard deduction than itemizing.
Can't you buy season tickets without being in the HC? I seem to remember that the last few years you could. If that's the case then that's probably the loophole you can exploit.
HC members get the first chance to buy season tickets. If there are any season tickets remaining after the HC members buy theirs, then they are sold to the public. This is how a bunch of people not in the HC got seasons tickets for the 2015 season when anOSU played at Lane.
Taxes are always passed on to the consumer. Ticket prices will go up. Unlikely that compensation packages for coaches can be restructured enough to get out of the IRS crosshairs.
unclear whether that 21% is applied to a) all income the non-profit receives or if it's applied only on b) the salary figure.
still a big impact, but if it's all revenue that is a major hit
My take away it is applied to the top earner, who for the most part in most big state funded schools is the Football or Basketball coach.
Oh yeah that is a another possibility - that it's an extra tax on the employee. In that case salaries will just go up even further to compensate.
21% is the new tax percent for a for-profit business. Accordingly, the article is suggesting that a non-profit is simply losing it's status and becoming a for-profit business and paying 21% taxes on earnings as all businesses do.
*affect
Fixed however:
People Who Constantly Point Out Grammar Mistakes Are Pretty Much Jerks, Scientists Find
Or people who are observant.
But mostly jerks.
Another way to look at it is one Hokie helping another Hokie improve one nuance of his English.
If other Hokies notice it, then so do other people.
Keyword is constantly. I don't really make a habit of it, but affect/effect is one that irks me. I was really surprised I was the first to take time to mention anything.
Scientists will probably also find those who don't know the difference between their and there or your and you're are pretty much dumbasses.
I don't understand what your saying. Can you explain it differently so I can understand how it affects sentence structure and grammer.
Just a bunch of effectations.
I know the difference but sometimes it gets lost between my brain and my fingers when I'm tapping away.
Does that mean I'm the dumbass or just my fingers?
It might be a good idea for many athletic departments to split away from their respective University umbrella and operate as a for-profit enterprise in that case. A great many athletic departments lose money or just break even, which would minimize any tax they would have to "pay."
Most donors will pay less in taxes under the tax reform bill, regardless of charitable deductions. If I donate $50 and get a $1000 tax return one year, then donate $50 and get a $1500 tax return the next... why would I care? IMO, it is safe to say that the new law won't affect donation totals to Virginia Tech much.
There are going to be a lot of "This exemption is gone!" and "That exemption is gone!" stories over the next week or so. That's just how the 24 news cycle works, it's an easy way to get clicks.
The reality is that the mass majority of people will either pay the same or less taxes under the new tax law.
The flat increase of the standard deduction is going to make charitably deductions a moot point for most average income people.
the difference is that under current tax code, donating $1000 costs you only $750 out of pocket because you'd be paying $250 in taxes on that $1000 if you didn't donate it.
New tax code, the standard deduction being larger means many people won't be itemizing anymore because the standard deduction saves them more than their combined charitable, etc, etc deductions. That means a $1000 donation is now $1000 out of pocket.
Sure they'll likely have more cash in their pocket to pull from, and sure some people will just stroke the same check but tons are going to re-assess what to do with that additional money in their pocket that no longer is fixed to charitable donations....
I don't donate for the deductions, donate because you believe in the cause.
Yes, but like he pointed out, it changes how much I can afford to donate. Continuing the example, if $750 is all I can afford to donate, this year I donate $1000 to the Hokie Club, save $250 on taxes, and come out of pocket $750.
Next year I can only donate $750 because that's all I can afford, so the Hokie Club gets $250 less.
I assume you mean of people who donate to the HC, right? Reality is not correct if you're talking about all the people in the United States.
I believe he means it the way he said it, and is correct.
I will leave my point as-is, as any further discussion would lead to a digression that no one really wants.
Good call.
Appreciate it.
We'll be paying more overall...that alone would be enough to re-evaluate my donations but losing the deduction for donations to college athletics tied to seating...well that doesn't help. I haven't figure out if that will be applied to general donations to the Hokie Club. If so, that's devastating.
If not saving money on your taxes is why you aren't donating, then explain something to me.
Please tell me where it makes mathematical sense to spend $5000 on a Hokie Club donation to save $1250 on your tax bill because you still spent $3750.
Because now he can only afford to donate $3750, so Hokie Club donations will be lower.
This whole tread is click bait.
Is it a charitable donation if you decide not to do it because it doesn't benefit you?
Good point.
Maybe that's the real test.
I got to talking about coaches salaries with my coworkers and how many scholarships could be funded by them and got to thinking, what are everyone's thoughts on Cost of Living adjusted cap on coaches salaries? Aim for something around $2 million and use the same adjustment factors that the NCAA applies to players stipends. All the remaining cash can be allocated to funding full team scholarships to the Olympic sports or adding more sports. What does TKP think?
This would make it really difficult to retain an assistant like Bud Foster. I suppose it could work if each coach could get paid the max, but if it turned into any kind of salary cap for the full coaching staff, there'd be major movement on the coaching caroursel every single year.
I will be more clear in my original proposition, the max for head coaches would be 2 million-ish, I hadn't put more thought to a total cap for the coaching staff. For the hypothetical, let's cap the entire coaching staff at $10 million-ish, plus-minus the NCAA stipend adjustment factor.
The salaries have just begun to become the next arms race. Most of the colleges that can afford to spend the big bucks on coaches are located in low cost of living areas, so $2 million a year would still enable a guy to live like a king. If the coaches want more than that, there is the next level.
Slightly off topic, but I sit for the CFP exam in March and the entire cadre of folks in my Kaplan prep class are wondering if we are going to be tested on inaccurate tax information now.
There's a test now to be part of the College Football Playoff committee?
"Are you in love with the SEC?
(A) Yes (B) Yes""
If I remember correctly they don't add in any new information but will sub out questions that have since become irrelevant or could be confusing based on changes to the tax code.
Good luck!