Bills
| 3.23.22

Ending Tax Breaks for Professional Sports Leagues (H.R. 296)

Do you support or oppose this bill?

What is H.R. 296?

(Updated June 9, 2020)

This bill — the Pro Sports Act — would remove professional sports leagues from the Internal Revenue Code's list of tax-exempt organizations, effectively requiring them to pay taxes. Any professional sports organization that has annual revenue in excess of $10 million — think the National Football League (NFL), the National Hockey League (NHL), or the Professional Golf Association (PGA) —  would be prevented from being classified as a 501(c)(6) tax-exempt organization. Leagues under the $10 million threshold would be still be eligible for tax-exempt status.

Argument in favor

Professional sports leagues rake in extraordinary amounts of money and their tax-exempt status essentially allows these organizations to be subsidized by taxpayers. They should be required to pay taxes.

Argument opposed

Professional sports leagues are the substance of the American pastime and do a lot of charitable work with the money they make. Taking tax breaks away from them could raise costs that will be passed on to fans.

Impact

Professional sports leagues; their teams, players, coaches, and fans; and the IRS.

Cost of H.R. 296

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Congressman Matt Gaetz (R-FL) assumed the sponsorship of this bill following former Rep. Jason Chaffetz's (R-UT) retirement, which would end the tax-exempt status of professional sports leagues:

"Like many Americans, I was dismayed and disgusted to see multimillionaire athletes sitting or kneeling during the national anthem. Standing for the national anthem shows respect for our nation, and for the brave men and women who have sacrificed so much to protect our freedoms. Those hard-fought freedoms include freedom of speech, and free speech does include protest. But nowhere in the Constitution does it say that Americans are required to subsidize disrespect for America, or to have their tax dollars wasted on corporate welfare to sports teams. Tax reform is currently the top priority of Congress. We must close this loophole in the tax code, and end taxpayer subsidies for professional athletics. If players want to protest, they have that right — but they should do it on their own time, and on their own dime."

Of Note: The National Football League (NFL) has recently come under intense scrutiny following numerous domestic violence scandals and protests of the national anthem. This extra attention has led some to wonder why the NFL - and other professional sports leagues - are classified as tax exempt entities by the IRS.

Major League Baseball gave up its tax-exempt status in 2007 and the National Football League followed suit in 2015, but the Joint Committee on Taxation estimated in 2014 that closing the tax loophole would generate about $10 million in tax revenue annually and $109 million over a decade.

Media:

Summary by Eric Revell

(Photo Credit: Marine Corps - Lance Cpl. Matthew Bragg / Public Domain)