Bin unserious proposed NIL tax break bill

A bill contemplated by Republican state Rep. Dixon McMakin makes no fiscal sense and only subverts the purpose of higher education in Louisiana.

The bill in concept would exempt from state income tax earnings that college students receive from Name, Image, and Likeness deals in athletics. Individuals may negotiate these or another organization, such as a school, may do so on behalf of all its eligible students.

Dollar figures for these are generally not public, and they can be substantial. Publicized have been deals by Louisiana State University gymnast Livvy Dunne who, despite modest athletic credentials, has one of the most lucrative set of NIL deals due to her superior marketing skills, estimated in the neighborhood of at least $4 million annually. Regardless, given the state’s income tax rates, such an exemption may not even cost the state eight figures annually.

But that’s not the point, which McMakin clearly misses in his comments about his concept. He says it will attract talent — other states apparently are pursuing something similar, although some already don’t have state income taxes — and keep higher education institutions (presumably both public and private) “competitive.”

Yet just what kinds of talent and competition are important to him, athletics or academics? Has he forgotten the reason we have universities and have taxpayers pony up about half of their costs is to provide the best tertiary education possible for state taxpayer families? That it isn’t about building institutions around a priority of first having the most successful sports teams possible?

This backwards thinking is an insult to taxpayers who don’t want to see reduced service levels and/or higher taxes just to give institutions a better chance to win more competitions. That does next to nothing to improving student retention and graduation with a quality degree.

Of course, some portion of state appropriations to public colleges winds up supporting intercollegiate athletics, but the vast bulk of spending on this comes from private, voluntary donations. This proposed method can’t even be controlled by the appropriations process, and any tax expert will tell you it’s bad fiscal policy to create tax exceptions that evade accountability.

One could argue that taxpayer-financed means to produce better teams could help the state’s bottom line for higher education in that enough success creates not only enough money to pay back state sources that go into athletics but also extra funds that can go into the academic side. For example, LSU in 2022 (latest data available) was one of only a dozen public schools (there may have been more; a few states can shield this data and private schools aren’t obligated legally to report it) that covered completely its public allocation for athletics and also its athletic department transferred back over $8 million to the academic side.

But, again, this is poor fiscal policy to fund higher education. It’s a crapshoot whether enough money can be made annually to do this and would be to figure the tradeoff between forgone tax revenues and increased success translating into higher ticket sales and bonuses for championship events; my guess is the forgone revenues wouldn’t be made up. And, again, tax policy experts will tell you a broad-based tax break on a general set of activities is far more likely to spur economic development than would loopholes specific to discrete activities.

And, of course, this strategy of revenue generation doesn’t always work out. LSU in 2022 ranked sixth in this from athletics, but at the very bottom of the known list of 232 schools is my alma mater the University of New Orleans, facing severe financial pressures that undoubtedly have hampered the silver and blue’s athletic performances, not helped by its 2022 athletics deficit of over $2 million or with expenses about doubled over revenues. I would really like to see the Privateers succeed athletically, but I am entirely unwilling to see the state robbed of tax revenues to do it. (And if you think I’m some sort of academic scold looking down on intercollegiate athletics, as an example come around my place weekends and some weeknights this spring where we can watch on television or listen to on radio University of Oklahoma Sooner softball while I’m wearing a shirt extolling the virtues of one of the 2013, 2016, 2017, 2021, 2022, 2023, or 2024, or all of the 2021-22, 2021-23, or 2021-24 national championship teams. I don’t miss a pitch as my alma mater goes for five in a row, which would be the ninth all time and eighth in the last 12 championship years).

We have and fund universities to teach a knowledge base, critical thinking skills, and methods of expressing these products – not to win sports contests. To have tax policy driven by a desire for sports success rather than by academic success detracts from the latter and is unbecoming to anybody who seriously wants to see beneficial policy change in Louisiana. McMakin or anybody else should abandon any effort to introduce such a bill.