New tax law makes PSD donations non-tax-deductable

Submitted by JamieH on January 26th, 2018 at 11:59 PM

So, I just found out about this when I made my PSD payment for the 2018 season. Apparently PSD donations are no longer 80% tax deductible as donations to the university. I realize that with demand for Michigan tickets high, people will probably not care and will still foot the bill. But some schools have really tapped this out. For example, the ESPN article I link here says Duke basketball requires a $4,000 per seat donation. If you can't write that off anymore, that is a huge price increase.

 

What effect do people think this will have on ticket pricing? Will people just suck it up and pay anyway? Will schools adjust and find a different way to get money from people? Nothing ever gets cheaper so I can't imagine the tickets will. I only have 4 tickets in the Blue, so my PSD was only $840. The tax savings writing off $672 was not that big, but I know lots of people are getting hit much harder than me on this.

 

http://www.espn.com/college-sports/story/_/id/21437392/college-administ…

 

Please try not to make this into a political thread--try to keep it to a discussion of how the new tax law will affect college athletics.  Also, i realize this is insignificant next to the crap going on in EL. Just happened to find out about it as I paid my PSD.  

Comments

BlueInWisconsin

January 27th, 2018 at 12:04 AM ^

Never should have been a tax deduction in the first place. Those boxes with all the fat cats in them shouldn’t be deductible either. I love sports but tax payers should not be subsiding football tickets.

JamieH

January 27th, 2018 at 12:21 AM ^

But universities have set up the pricing system with the tax deduction in mind. If you have 2 tickets to Duke basketball, you just lost a $6,400 tax write off every year. That pretty damn significant.

So, will universities respond by altering their prices? Will people stop buying tickets and just watch the games on TV? Or will people just suck up the extra cost because whatever?

Like I said, I was only getting a $640 write off so it wasn't that big a deal for me, but for some people in the country, this may have been the difference between buying and not buying tickets, especially at places with much higher PSDs than Michigan.

redjugador24

January 27th, 2018 at 7:54 AM ^

But if you have 2 season tickets for Duke bball and can drop 8k on PSDs before you even buy the tickets, you can't really expect a ton of pity for losing the $6400 write off. Suck it up or stop buying season tix.

Sione For Prez

January 27th, 2018 at 8:54 AM ^

Many people may choose to stop buying season because that $6400 reduction in taxable income is significant. The athletic departments will need to lower the PSDs to keep season ticket holders on and will look to other ways to offset those decreases which would potentially lead to increases in ticket prices, concessions and parking.

Luckily, Michigan's PSDs are not high compared to many other places. This will probably not have as much of an impact for us.

Steeveebr

January 27th, 2018 at 8:18 AM ^

I agree that the pricing system was set up with this in mind, but that is a failure of the previous system.  Much like high tax states that are threatening to sue because of the decrease in the SALT deduction.  Essentially, many other parts of government were taking advantage of the old rule to steal tax money from the federal government and increase their own coffers.

PopeLando

January 27th, 2018 at 11:09 AM ^

The individual mandate is gone.

This means that fewer healthy people and fewer poor people will buy insurance.

Meaning the remaining risk pools will be made up of sicker people, AND utilization of emergency services will go up.

Meaning premiums will go up faster than if the Individual Mandate was still in place.

Add that to the expansion of Association Health Plans and the uncertainty of CSRs. (Insurers have to prepare for either receiving CSRs or not, which is a huge risk factor they have to mitigate.)

Meaning that insurer profit margins will massively shrink or disappear altogether.

Meaning insurers will exit the Individual non-subsidized market.

Add that to the extreme shrinking of SHOPs that kicks in this next plan year.

... Yeah, if I was not personally employed and covered in a group plan from a large employer, I'd be nervous.

EDIT: not saying anything is GOING to happen, but a lot of insurance companies have stopped offering products due to being jerked around for the better part of 4 years. When you're told to price a product as if you're going to receive Reinsurance and Risk Adjustment, and you don't receive it... you lose billions, and, more importantly, you lose faith that the government even WANTS a non-subsidized market.

Sorry for the essay.

Huma

January 27th, 2018 at 2:58 PM ^

So I assume you are saying you won’t have insurance then, which means if you have a medical emergency then you have to pay out-of-pocket, which presumably you won’t be able to pay.
This will cause 2 things to happen: (1) all the other tax paying citizens will essentially be subsidizing your treatment since the hospital won’t be able to collect against you, which will require they raise rates on paying customers to compensate (causing healthcare costs to increase for everyone), and (2) you could face personal bankruptcy in trying to pay off this bill.
Now multiply this problem out by the millions of people that are likely to either lose coverage or elect to not obtain coverage and explain how the new healthcare plan from the Republicans is going to lower healthcare costs for everyone? This is a terrible outcome for everyone, which is what the individual mandate was trying to protect against.

MGOTokyo

January 28th, 2018 at 2:44 AM ^

can lower the overall cost very much. First, costs are inflated due to the litigenous nature of the system compared to other developed countries and the fact that we suddenly gave out free healthcare to 32 million people. The money has to come from somewhere.

MGOTokyo

January 28th, 2018 at 2:30 AM ^

As a sole proprietor, my health insurance increased over 100% since the onset of the unaffordable healthcare act. In 2017, my cost was going to be $2200/mo (family of 5) with a $6500 deductible. Doing the math, I would have to pay $33,500 before insurance covered 1 cent! So, like you, my government was fining me for not buying a product I couldn’t afford. I still don’t have health insurance but at least I don’t have to be forced to subsidize others. Even as a political moderate, this one issue decided my vote.

JamesBondHerpesMeds

January 29th, 2018 at 4:30 PM ^

Am I reading this right that your entire family doesn't have health insurance?

What happens if your child (and I hope none of this happens) gets injured or gets cancer or something else and, instead of having some form of insurance to cover it, suddenly has no money saved up to go to college?

The obtuseness of these decisions simply astound me. We don't bat a fucking eye at paying $45,000 for a car but scoff when healthcare costs a portion of that.

 

Muttley

January 27th, 2018 at 11:12 AM ^

and the money seekers (just about all humans do this) at the universities found a way to push the price of athletic tickets higher by giving their customers a partial refund paid for by the government.

Is purchasing tickets a tax deductable transaction?  I certain don't think it should be.

HailHail47

January 27th, 2018 at 9:35 AM ^

Thats just semantics. Just like the government terms lost revenue as “spending” as if they owned everything and choose to spend it by letting you keep it. A lot of people get a refund come April 15th after they overpaid on taxes all year, so they are more likely to associate taxes as a good thing. It’s all game designed to make you less emotional about being a slave laborer for 25% (three months!) of the year or more. Now, get back to work!

Steeveebr

January 27th, 2018 at 2:16 PM ^

You did not understand his point.  If society should have more of it, then incentivize the money going there.  In other words if the Governent wants to encourage corporations to donate to charity, they create a tax deduction for when they donate to charity.  

Not that society should be taxed more or less or that people should have less income.

HailHail47

January 27th, 2018 at 1:03 PM ^

So if we go back to incentives and disincentives, then you must agree that taxation itself is a disincentive for productivity, right?

Also if you are going to use a snarky phrase like “ this is literally how tax policy works”, you shouldn’t assume that your audience is clueless. I’m a tax consultant at a big four firm, I think I know a good deal about “how it literally works.”

blue in dc

January 27th, 2018 at 5:13 PM ^

And yes, there will be some disincentive to do whatever is taxed, whether it be work, gasoline, cigarettes or many of the other things that are taxed. On the other hand there are important things we get in return, roads, a military. The challenge is balancing all of those things as you well know. A society with very low taxes and a society with very high taxes both have problems. Finding the right balance is a good reason to participate in our government.

gbdub

January 27th, 2018 at 1:44 PM ^

Tax rates determine how much of your income the feds take. If you want to bitch about taxes, bitch about the rates.

Deductions are just the feds letting you pretend that money spent on certain government approved things was never really income. I can live with that for something like healthcare, saving for your kids’ education, or actual charitable work, but I’m well past the point where I can call mandatory fees for Duke bball tickets “charity” with a straight face.

Personally I’d rather have lower rates and spend on whatever I decide I want (rather than what the feds say I should want).

Steeveebr

January 27th, 2018 at 2:11 PM ^

This is a very uniformed view of your own control regarding withholdings, deductions and itemization.  No taxes were paid all year, a company withheld at your request and under your control a certain amount.

And compairing a 25% tax rate to slave labor is also highly uninformed.

MGoBrewMom

January 27th, 2018 at 9:59 AM ^

But I don't care. I used to have a deduction, and now I don't.

Same with my property tax deductions. No tax cut for me; quite the opposite--I'm actually funding the "tax cut"...because I own property in California.

But hey, I said I didn't start a thread because its political in nature. Just stating facts, no opinions in this post... you can tell, I'm completely neutral here.

gbdub

January 27th, 2018 at 1:26 PM ^

Exactly. California was able to charge higher taxes because of the SALT deduction. To the extent that CA’s taxes are higher than the rest of the country, that could be called a subsidy to CA. Just like getting your Football tickets partially funded by the feds was a subsidy.

Plus if you can own property in CA AND afford Michigan season tickets... I think you’re doing okay. I do pretty well, and I certainly couldn’t afford both without some hardships elsewhere.

MGoBrewMom

January 27th, 2018 at 5:05 PM ^

If I "own property and afford to buy Michigan season tickets" I should be happy to fund the fake tax cut? Sounds like the opposite of conservatism to me.

Take a look at numbers and see how much the state of CA contributes on a federal level, compared to what the state takes back in federal services. This state is subsidizing the poorer states with its contributions. So, regardless of what we can afford, the California housing market taking a substantial hit is not good for the country. I agree there are good things about the new tax plan--but I am personally getting screwed.

gbdub

January 27th, 2018 at 7:55 PM ^

No, rich Californians are paying their share of federal taxes, which get distributed where needed throughout the country. The fact that they’ve driven up their local taxes with restrictive housing policies and bullet trains to nowhere shouldn’t mean that they should get out of funding their fair share of federal taxes.

Also, as others have noted, the standard deduction went up for everyone. If, to fund that, you can no longer get special carve outs for luxury goods like football tickets and expensive property in high demand locales, that’s going to be hard to gin up much sympathy for from those of us not in a position to afford such things.

loverbuck

January 28th, 2018 at 2:25 AM ^

According to the 2015 IRS report and census 15 states paid more PER CAPITA in federal contributions than California, including Ohio. California had the most gross federal revenue, but thats because they are the largest state.

The reason Californians are paying less PER CAPITA in federal revenue is because the state of California has ginned up the system and failed to keep their state taxes in check thereby causing citizens in 15 states to subsidize the citizens of California for their lack of self discipline.

If a flat federal tax was implemented without ANY DEDUCTIONS, California would stand a strong chance of becoming the 2 largest state in the union.