When I was a TA at Iowa, my scholarship was not taxable, but my stipend was taxable. It would not be difficult to draft rules similar for college athletes.
In my opinion:
- Allow each college athlete to opt-into employee status.
- Some athletes are not valuable enough to command more than the scholarship they are awarded. By electing non-employee status, their benefits are guaranteed and non-taxable.
- For the athletes that do elect into employee status, employment contracts can lock them into a school for a period of time, just like coaches’ contracts. If the athlete wants to leave, the school they depart to may have to pay a buy-out. If the school wants to cut the player, the player may be entitled to a buy-out. The contract could also be structured to be incentive based.
- Taxability:
- Scholarships: No
- Housing:
- No if in general student housing.
- Yes if not general student housing.
- Food: No
- Books / Tutors: No
- Professional coaching: No.
- This is rather obvious. What job on earth taxes employees for the training they receive? Pro athletes do not get taxed on the coaching they receive. I was never taxed on the tutelage I received from the partners at my firm.
- Monetary / monetary equivalent compensation beyond scholarship: Yes.
- If everything is brought above the table, we will no longer have to hypothesize what kind of under the table payments athletes are receiving. Put everyone on a level playing field. When I was a student at Iowa, I talked with football players that had stories from the NFL combine about how players from bigger schools were bragging how they got paid in college. For example, at Alabama the players were instructed to leave their car doors unlocked during practices. When they’d get back to the car, they’d have an envelope of cash in the glove compartment.
- When everything is above the table, schools / boosters will not have to resort to “creative” ways of paying athletes.
The athletes are worth a lot to these schools, and it’s time people stop ignoring that economic reality.