"Hate The Rich" Lawmaking -- Or What I've Just Named "Specialty Lawmaking"
If the rest of us get to write off fines when we do our taxes, so should reprehensible wildly rich guys.
There's something disgusting going on in Congress as of Thursday (more than any usual Thursday in Congress), and it's a bill targeted at rich sports team owners.
It's basically what I've just deemed "specialty lawmaking" -- laws narrowly targeted at people or causes many dislike, probably mostly intended by the lawmakers who propose them to gin up their own popularity at voting time.
Richard Simon writes in the LA Times:
San Fernando Valley Congressman Tony Cardenas introduced legislation Thursday that would prevent sports team owners from writing off fines as a business expense on their federal income tax returns."The American people are happy to help small businesses grow, but paying fines for multimillionaires to subsidize bad behavior should not be the responsibility of American taxpayers," Cardenas, a freshman Democrat, said in a letter to House colleagues seeking their support.
The Stop Penalizing Taxpayers for Sports Owners' Fouls Act comes after Sterling, the owner of the Los Angeles Clippers, was fined $2.5 million, the maximum allowed under NBA rules, and banned for life from association with the team after the league determined he made incendiary remarks about race.
"When it's a $2.5-million fine, that's a significant write-off," Cardenas said in an interview in the Capitol. "I don't think this is a business investment."
The measure would amend the Internal Revenue Code to "disallow a deduction for any fine paid by an owner of a professional sports franchise." It would apply to fines imposed after Dec. 31, 2013.
"Cardenas, a freshman Democrat..."
Oh, I see how it is. Here's somebody about to lose his incumbent seat because of the Affordable Care Act fiasco and, like Amy says, he's trying anything to stay in office.
Fayd at May 1, 2014 3:19 PM
This comes uncomfortably close to being a bill of attainder, which is forbidden under the Constitution.
Rex Little at May 1, 2014 3:45 PM
The IRS says:
"Penalties and fines. Penalties paid for late performance or nonperformance of a contract are generally deductible. For instance, you own and operate a construction company. Under a contract, you are to finish construction of a building by a certain date. Due to construction delays, the building is not completed and ready for occupancy on the date stipulated in the contract. You are now required to pay an additional amount for each day that completion is delayed beyond the completion date stipulated in the contract. These additional costs are deductible business expenses.
On the other hand, penalties or fines paid to any government agency or instrumentality because of a violation of any law are not deductible."
So I'd hazard a guess that if his fine was levied because he violated the NBA's standards or his contract with the NBA he can deduct the fine.
Peter M at May 1, 2014 5:14 PM
You'll see similar things when it comes to Evil Oil Companies. The complaint takes the form of OMG! we're subsidizing Evil Oil Companies with corporate welfare! This must stop!!!
And by that, they mean the standard write-offs that other corporate entities take advantages.
Now if Congress wants to have a conversation about restructuring taxes so that there are no write-offs of any sort and remain revenue neutral, I'm ok with that. But I don't think Congress is composed of actual adults capable of such a discussion.
Too many rent seekers seeking to tilt the playing field to their advantage...
I R A Darth Aggie at May 1, 2014 5:35 PM
I am not an accountant, but I think fines such as this come under the same heading as alimony.
One party gets to deduct the fine, but the other -- the NBA in this case -- has to declare it as income.
Jeff Guinn at May 2, 2014 12:27 AM
Three things wrong with this idea:
- It's a private "fine" levied by a private organisation, and hence none of the government's business. As others have pointed out, this is a business expense for one party, and income for another.
- The law is too narrowly tailored. Congress once passed a law specifically reducing inheritance tax for the "Julio Gallo" wine family. Such specific laws are corruption, pure and simple.
- The law is retroactive. What kind of society changes laws retroactively? Hint: not one you really want to live in.
a_random_guy at May 2, 2014 1:41 AM
"This comes uncomfortably close to being a bill of attainder, which is forbidden under the Constitution."
And I wish courts would take that provision of the Constitution more seriously. It does remind me of the episode from Maryland a few years ago where the state passed a bill specifically crafted to force Wal-Mart out of Maryland by way of health insurance regulations. But -- oops! -- it wound up impacting Lockheed Martin, which responded by moving most of their high-paying jobs in the state to Virginia.
Speaking of which... isn't California offering all kinds of deals and subsidies to get an NFL team back to Los Angeles? I guess they're going to have to sweeten that offer further.
Cousin Dave at May 2, 2014 6:51 AM
Sure. Sterling's gonna own it.
Radwaste at May 2, 2014 10:07 AM
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