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TAX REVISIONS OF 2004 AND PRO SPORTS TEAM OWNERSHIP
Author(s) -
COULSON N. EDWARD,
FORT RODNEY
Publication year - 2010
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.2009.00192.x
Subject(s) - league , allowance (engineering) , football , depreciation (economics) , value (mathematics) , value added tax , payment , economics , wonder , government (linguistics) , ad valorem tax , business , tax reform , public economics , finance , law , political science , market economy , operations management , psychology , social psychology , machine learning , financial capital , physics , astronomy , capital formation , philosophy , human capital , linguistics , computer science
Tax law revisions of 2004 altered the “roster depreciation allowance” enjoyed by pro sports team owners. Supporters claimed this would practically eliminate costly legal oversight by the IRS and, ultimately, increase owner tax bills. Government officials and leagues remained silent on team value impacts but outside analysts argued they would rise by 5%. We model this policy change and investigate it empirically. Supporters in Congress were absolutely correct that owner tax payments should increase but outside analysts underestimated team value increases by half. No wonder Major League Baseball and the National Football League favored the revision. ( JEL D21, G38, H25, L83)