Burr responds to NCAA vote with plans to tax student-athlete scholarships

U.S. Sen. Richard Burr, R-N.C., will be introducing a bill to tax student-athlete scholarships like income if those students choose to profit off of their likenesses, he announced in an Oct. 29 tweet.

“If college athletes are going to make money off their likenesses while in school, their scholarships should be treated like income,” he said. “I’ll be introducing legislation that subjects scholarships given to athletes who choose to ‘cash in’ to income taxes.”

The NCAA's Board of Governors originally spoke out against student-athletes profiting from their likeness. After California Gov. Gavin Newsom signed a law allowing student-athletes to profit from their likeness in September, the board wrote him a letter, saying the measure would upend a level playing field for all student-athletes.

“NCAA member schools already are working on changing rules for all student-athletes to appropriately use their name, image and likeness in accordance with our values — but not pay them to play,” the board said in the letter. “The NCAA has consistently stood by its belief that student-athletes are students first, and they should not be employees of the university.”

Burr’s announcement came as a response to the recent move by the NCAA to allow student-athletes to benefit from the use of their name, image and likeness, which the NCAA’s board unanimously approved on Oct. 29. 

Burr's office did not respond to a request for comment by the time of publication.

After the board’s vote, it directed its three divisions to consider updates and bylaws to comply with these changes.

“This modernization for the future is a natural extension of the numerous steps NCAA members have taken in recent years to improve support for student-athletes, including full cost of attendance and guaranteed scholarships,” said Michael Drake, chairperson of the board and president of The Ohio State University.

This is not the first time lawmakers have focused their attention on the NCAA and the idea of student-athletes profiting off their own likeness. U.S. Rep. Mark Walker, R-N.C., spoke out against the NCAA ahead of its board's Oct. 29 meeting. He said in a statement before the meeting that while the board meets, student-athletes will be giving their all at practices across the country.

Walker’s Student-Athlete Equity Act, which he introduced in March, would change the tax code to allow student-athletes to have the option to benefit from their likeness, which Walker says would force the NCAA to change their model. 

“While they discuss whether or not to give basic publicity rights back to student-athletes, a pittance compared to their profits, they should do the right thing,” he said in the statement.

After the meeting, Walker released another statement, saying lawmakers had the attention of the NCAA, but they needed their action.

“While their words are promising, they have used words in the past to deny equity and basic constitutional rights for student-athletes,” he said. “The NCAA is on the clock, and while they are, we’re going to keep working toward the passage of the Student-Athlete Equity Act to make sure their words are forced into action.”

Erica York, an economist with the Tax Foundation, said the current tax policies for students and student-athletes are the same. If a student uses their scholarships to pay for tuition, fees and required books, the scholarship is tax-free. If that student uses their scholarship on non-required materials or travel, the scholarship is treated as taxable income. 

She said the exclusion of student scholarships from income taxes led to a loss of $3.2 billion in government revenue in 2019, but taxing the student-athlete scholarships would lead to only a minor increase in government revenue. She said Burr’s proposal and the idea of singling out student-athletes in the tax code is not good policy.

“The goal of tax policy should be to treat similarly situated taxpayers the same. We want the tax code to be neutral across taxpayers. This would be non-neutral,” she said. “It would be a distortion, and it would generally just be bad tax policy to single out a group of students to tax their scholarships."

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