Zinger Key Points
- Trump administration takes aim at tax perks for wealthy sports team owners, stirring a potential policy showdown.
- With a potential hit to a billionaire's tax playbook, the sports world watches as policy proposals threaten status quo benefits.
- Find out which stock just claimed the top spot in the new Benzinga Rankings. Updated daily— discover the market’s highest-rated stocks now.
President Donald Trump administration is reportedly considering the removal of specific tax benefits for billionaire sports team owners.
What Happened: The proposal to modify the tax benefits was announced by White House Press Secretary Karoline Leavitt last week.
The current tax structure allows buyers of sports franchises to amortize the value of their initial investments over a span of 15 years, a benefit that is also extended to other businesses.
However, sports franchises have the unique privilege of writing off intangible assets such as TV deals and player rosters, which are unlikely to depreciate over time.
The specifics of this proposal are yet to be clarified, and it remains uncertain whether this move will garner support from Congressional Republicans, reports Bloomberg.
Garrett Watson, director of policy analysis at the Tax Foundation, opines that limiting these deductions would have a minimal impact, potentially raising hundreds of millions to a few billion dollars over a decade.
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On the other hand, Eric Nemeth, a tax partner at Varnum law firm, argues that existing billionaire owners are unlikely to be significantly affected due to the complexity of applying such changes retroactively.
Presently, 42 of the world’s 500 richest individuals own US sports teams, with a combined worth of $869 billion. This list includes names like Steve Ballmer, Rob Walton, Miriam Adelson and family, Dan Gilbert, Hasso Plattner, Henry Samueli, Philip Anschutz, Stan Kroenke, David Tepper, and Robert Pera.
Why It Matters: The proposed changes to the tax benefits could potentially disrupt the financial dynamics of sports franchises. While the impact is expected to be minimal, it could still lead to a significant increase in tax revenues over the next decade.
However, the feasibility of implementing these changes retroactively remains a contentious issue, potentially limiting the impact on existing billionaire sports team owners.
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