Never expect any less from the worst hackjob media outlet in America.
http://www.huffingtonpost.com/dean-baker/does-the-university-of-mi_b_6420202.html
Let them eat cake!
kumbaya… <>
How does the Huffington post come up with this crap? I mean what is thier logic here?
Do they think: Michigan’s coach is paid millions->the only possible explanation is that he taking from people who need food stamps.
The logic is say the old coach is paid $3M/yr; new coach $7M - where does the $4M difference come from - a $4M booster donation most likely. Cost to booster of $4M less the tax deduction impact; so maybe $2.5M net cost and lower taxes of $1.5M. Now this wealthy booster may have an alternative minimum tax that largely eliminates the benefit; but that is the logic.
The core thesis is flawed, hence all of the conclusions are flawed: of the total salary, only about 10% is endowed; in addition to which the part that was endowed would have been taxed, if cash, and subject to AGI referenced deduction limits. The rest of the compensation is clearly generated by ticket sales, merchandising and television. The author’s point may hold for programs which are NOT self-funded, but not at Michigan which is self-funded. Let’s look at those NOT self-funded: they are generally “lesser” schools which will not attract donations and are even less likely to be subject to the author’s logic because with few donations attracted, few deductions will be taken and those deductions will probably be AGI limited. For gifts which are not cash, there is an original cost-basis which may or may not be equal to the donated basis. If the bases are roughly equal, there is no loss of tax revenue based on capital gains foregone and there still would be the AGI limit.
The real problem has nothing to do with tax deductions and everything to do with schools which are not self-funded diverting money from the academic mission. That said, some of those schools do so with the connivance of the state legislators (Rutgers?). That is in fact a real problem at some schools, but it is up to the voters to replace/recall legislators if they don’t deem athletics an appropriate priority.
Let us face it, this so-called Michigan alum has succumbed to the cheapest form of journalistic sensationalism; knowingly distorting and manipulating the truth to write a story. Unfortunately, many people are ignorant of how athletics departments at universities like Michigan are funded and will think he wrote a conscientious and honest article. He should be ashamed of himself and should be exposed for the pretentious boob that he is.