One of the biggest complaints the American people have about the federal government is that Washington, D.C. is infected with cronyism and special-interest favoritism. In the area of tax policy, the corporation with the best tax lobbyist usually gets preferential treatment.
Look at the Professional Golfers Association of America (PGA) as a case study in how wealthy, professional golfers are getting a subsidy from the federal government to make even more money. Just like the U.S. Chamber of Commerce, the PGA enjoys tax-exempt status as a 501(c)(6) nonprofit organization.
This tax status has been a big moneymaker for the PGA. ESPN reported back in 2013, that “the PGA Tour’s nonprofit business model has allowed it to avoid paying up to $200 million in federal taxes over the past 20 years, and its tournaments—designed to benefit local charities—operate in ways that fall short of acceptable charitable practices.” While the Biden Administration is intent on soaking the middle class for more taxes, apparently wealthy sports organizations don’t make that list. Just goes to show you, yet again, how unfair the U.S. tax system is; the middle class gets soaked while the well-connected elites game the tax code to add tens of millions annually to their bottom lines.
What makes the PGA situation even more egregious is that these tax benefits don’t flow to the fans, the hosts of tournaments, or even the players. The benefits flow right to the cronies running the trade association. For this very reason, there was a lot of chatter during 2017 about the need to eliminate this perk during the debate of President Trump’s Tax Cuts and Jobs Act proposal. A provision included in the Senate bill called, “Repeal of Tax-Exempt Status for Professional Sports Leagues,” was actually under consideration, which prompted the PGA tour’s commissioner, Jay Monahan, to send Jack Nicklaus and Davis Love III to lobby Trump against the provision.
The PGA weighing in with then-President Trump to save their crony business model actually worked, ironically just before the PGA disqualified Trump’s Bedminster, New Jersey golf course from hosting the 2022 PGA Championship. But there is a chance to correct all of this and address the larger issue of crony capitalism and professional sports here in the United States.
In 2020 Representative Greg Steube (R-Fla.) and Senator Joni Ernst (R-Iowa) introduced legislation that would have prohibited any organization from being tax-exempt if it is a professional sports league, organization, or association, with a substantial activity meant to foster national or international professional sports competitions and has annual gross receipts in excess of $10 million. This proposal should be considered again.
As much as I love playing golf and watching the PGA, I’m not sure why an organization with billions in revenues from TV viewers, sponsors, and ticket and merchandise sales needs help from the taxpayers to meet its bottom line.
Honestly, Democrats should be revolted by the PGA’s special tax preference. Diversity is not a strength of the PGA. Women are not represented in the PGA’s leadership and when you look at a picture of them, one does not see a leadership that reflects the way America looks. The PGA has also been accused of raising money at charitable events that is diverted to pay athletes cash prizes and promotional costs. Add in the fact that they also have spent cash to purchase private golf clubs like Kentucky’s Valhalla and you would think the many practices of the PGA would offend your average Democratic politician.
Our system of government and its policies have become a warped, incoherent, and inconsistent mess due to special interest carve-outs. Republicans should call the Democrats’ bluff and force them to decide whether or not to allow lucrative professional sports organizations, like the PGA, to continue benefiting from special tax provisions. If nothing else, reintroducing this issue would highlight yet again the hypocrisy of the Democratic Party.