1 00:00:04,840 --> 00:00:07,880 Speaker 1: My guest published a really thoughtful op ed in the 2 00:00:08,000 --> 00:00:12,840 Speaker 1: Washington Post entitled targeting this two point eight trillion dollar 3 00:00:13,000 --> 00:00:17,360 Speaker 1: tax shelter could solve a big US problem which addresses 4 00:00:17,400 --> 00:00:20,159 Speaker 1: both our federal DestinE and a big idea for a 5 00:00:20,200 --> 00:00:23,520 Speaker 1: revenue source, which we're going to ask about it. I 6 00:00:23,600 --> 00:00:27,360 Speaker 1: am really pleased to welcome my guest, Scott Hodge. He 7 00:00:27,480 --> 00:00:31,200 Speaker 1: is a tax and fiscal policy fellow at Arnold Ventures 8 00:00:31,600 --> 00:00:35,480 Speaker 1: and President emeritus of the Tax Foundation, which has done 9 00:00:36,159 --> 00:00:38,960 Speaker 1: terrific work over the years trying to understand where we 10 00:00:39,000 --> 00:00:53,280 Speaker 1: are and where we should get to. Scott, welcome and 11 00:00:53,479 --> 00:00:55,280 Speaker 1: thank you for joining me on Newts World. 12 00:00:55,400 --> 00:00:56,200 Speaker 2: Thank you very much. 13 00:00:56,600 --> 00:00:59,440 Speaker 1: Let's start with the big picture. The latest numbers from 14 00:00:59,440 --> 00:01:04,040 Speaker 1: the Congressional Budget Office show deficits topping two trillion dollars 15 00:01:04,400 --> 00:01:07,839 Speaker 1: for years to come, with dead levels we've never seen 16 00:01:08,240 --> 00:01:12,600 Speaker 1: outside of wartime. When you look at that trajectory, how 17 00:01:12,640 --> 00:01:15,000 Speaker 1: worried should Americans be? 18 00:01:15,080 --> 00:01:18,120 Speaker 2: Extremely worried, mister speaker. The bottom line is that the 19 00:01:18,160 --> 00:01:22,720 Speaker 2: government is now spending a dollar thirty five for every 20 00:01:22,800 --> 00:01:26,600 Speaker 2: one dollar that it collects in tax revenues, and as 21 00:01:26,600 --> 00:01:30,200 Speaker 2: you mentioned, that is the trajectory for as far as 22 00:01:30,240 --> 00:01:33,039 Speaker 2: the eye can see. And I think some of the 23 00:01:33,080 --> 00:01:35,880 Speaker 2: more worrying elements of this is that so much of 24 00:01:35,959 --> 00:01:40,240 Speaker 2: that spending is on autopilot through entitlement programs, whether it's 25 00:01:40,240 --> 00:01:43,600 Speaker 2: solid security or Medicare or Medicaid and other things. But 26 00:01:43,760 --> 00:01:49,440 Speaker 2: the same time, the debt load is increasing the interest 27 00:01:49,520 --> 00:01:52,840 Speaker 2: payments on that debt, and I was looking at some 28 00:01:52,880 --> 00:01:57,360 Speaker 2: of those Congressional Budget Office forecasts and it's truly frightening 29 00:01:57,840 --> 00:02:02,760 Speaker 2: how much that interest payments are increasing over time. Currently, 30 00:02:02,960 --> 00:02:06,320 Speaker 2: we are paying more in net interest on the debt 31 00:02:06,600 --> 00:02:09,440 Speaker 2: than the size of our defense budget. But if we 32 00:02:09,480 --> 00:02:12,720 Speaker 2: look forward by about ten years or so, we'll be 33 00:02:12,760 --> 00:02:16,200 Speaker 2: spending as much on interest on the debt as both 34 00:02:16,280 --> 00:02:21,760 Speaker 2: defense budget and our domestic programs combined. That's really scary. 35 00:02:22,120 --> 00:02:25,040 Speaker 2: And what that means is that that interest because of 36 00:02:25,080 --> 00:02:30,160 Speaker 2: the debt, is crowding out spending opportunities for other more 37 00:02:30,200 --> 00:02:34,200 Speaker 2: important elements of government. And so we are really threatening 38 00:02:34,240 --> 00:02:37,000 Speaker 2: the future of the fiscal health of the country and 39 00:02:37,080 --> 00:02:40,520 Speaker 2: the government by this profligate spending. And we've got to 40 00:02:40,560 --> 00:02:41,679 Speaker 2: get it under control. 41 00:02:42,120 --> 00:02:44,960 Speaker 1: Wouldn't you say if a family came to see you 42 00:02:44,960 --> 00:02:49,720 Speaker 1: for advice and their share of their income going out 43 00:02:49,800 --> 00:02:53,120 Speaker 1: just for interest was comparably dis government. You would tell 44 00:02:53,160 --> 00:02:53,680 Speaker 1: them they were in a. 45 00:02:53,720 --> 00:02:58,560 Speaker 2: Crisis, absolutely in a crisis, and it's the kind of 46 00:02:58,600 --> 00:03:03,399 Speaker 2: crisis and what you cancel your cable subscription, your cell phones, 47 00:03:03,520 --> 00:03:07,920 Speaker 2: you scrimp in every way possible, and perhaps even go 48 00:03:07,960 --> 00:03:11,160 Speaker 2: out and get a second job, because your revenues and 49 00:03:11,200 --> 00:03:14,960 Speaker 2: your spending are simply not matching. And I do think 50 00:03:15,000 --> 00:03:17,600 Speaker 2: that we need to look at other opportunities to raise 51 00:03:17,639 --> 00:03:20,880 Speaker 2: revenues in doing so in a way that doesn't harm 52 00:03:20,919 --> 00:03:25,240 Speaker 2: the economy or put additional pressure on middle class and 53 00:03:25,320 --> 00:03:28,880 Speaker 2: working families and entrepreneurs. And as I mentioned in this 54 00:03:29,000 --> 00:03:31,919 Speaker 2: outed in the Washington Post, one way to do that 55 00:03:32,240 --> 00:03:36,080 Speaker 2: is to expand the corporate tax base, to tax the 56 00:03:36,400 --> 00:03:43,800 Speaker 2: business income of big nonprofit businesses corporations that are essentially 57 00:03:44,200 --> 00:03:48,560 Speaker 2: for profit but mascarading as nonprofit charities. And those are 58 00:03:48,600 --> 00:03:54,120 Speaker 2: things like hospitals, credit unions, universities, big consulting firms, things 59 00:03:54,160 --> 00:03:58,480 Speaker 2: like the NCAA, for instance, which is basically a sports 60 00:03:58,480 --> 00:04:03,920 Speaker 2: and entertainment business. Now there's roughly two point eight trillion 61 00:04:04,000 --> 00:04:08,920 Speaker 2: dollars with a business income that's being made by these 62 00:04:08,960 --> 00:04:13,560 Speaker 2: so called nonprofits, and it goes untaxed, and I think 63 00:04:13,600 --> 00:04:17,680 Speaker 2: that that's unfair. It's at best government favoritism. It's a 64 00:04:17,760 --> 00:04:22,240 Speaker 2: subsidy from the taxpayers to these large businesses. And from 65 00:04:22,279 --> 00:04:27,440 Speaker 2: a free market perspective, it's unconscionable to have these big 66 00:04:27,520 --> 00:04:33,920 Speaker 2: government subsidized businesses competing with for profit firms, and that 67 00:04:34,080 --> 00:04:37,560 Speaker 2: just undermines I think our free enterprise system to its core. 68 00:04:38,000 --> 00:04:45,320 Speaker 1: In your article is so breathtaking the notion that nonprofits, 69 00:04:45,320 --> 00:04:49,440 Speaker 1: that is, companies, foundations, organizations that claim they're not making 70 00:04:49,480 --> 00:04:55,600 Speaker 1: any money, actually generated two point eight trillion dollars in 71 00:04:55,640 --> 00:04:58,000 Speaker 1: commercial revenue. And you think about that for second. You 72 00:04:58,120 --> 00:05:00,400 Speaker 1: wait a second. And I've always felt this way, example 73 00:05:00,440 --> 00:05:05,279 Speaker 1: with hospitals that claimed to be nonprofit, except by the way, 74 00:05:05,279 --> 00:05:07,279 Speaker 1: they make a huge amount of money. They paid the 75 00:05:07,600 --> 00:05:11,279 Speaker 1: hospital administrator a terrific salary every year, they haet bigger. 76 00:05:12,320 --> 00:05:15,839 Speaker 2: What's interesting, I think very surprising for a lot of Americans, 77 00:05:16,160 --> 00:05:18,880 Speaker 2: is that there are more nonprofit hospitals than there are 78 00:05:19,000 --> 00:05:22,640 Speaker 2: for profit hospitals. And it's really kind of an anachronism. 79 00:05:22,800 --> 00:05:26,120 Speaker 2: It's an accident of history in so many respects because 80 00:05:26,440 --> 00:05:30,480 Speaker 2: these nonprofit hospitals started out as charity hospitals, and often 81 00:05:30,520 --> 00:05:33,719 Speaker 2: many of them were religiously funded, you know, back the 82 00:05:33,800 --> 00:05:37,359 Speaker 2: turn of the last century, and they were allowed to 83 00:05:37,400 --> 00:05:41,880 Speaker 2: grow and expand because of their charitable nature. But as 84 00:05:41,960 --> 00:05:46,279 Speaker 2: things moved on and the economy grew, they were allowed 85 00:05:46,279 --> 00:05:49,359 Speaker 2: to become big businesses. The biggest one of all is 86 00:05:49,440 --> 00:05:53,200 Speaker 2: Kaiser Permanente, which had one hundred and twenty seven billion 87 00:05:53,279 --> 00:05:58,159 Speaker 2: dollars worth of total revenues in twenty twenty three and 88 00:05:58,200 --> 00:06:01,560 Speaker 2: about nine billion dollars of net income i e. Profits 89 00:06:02,040 --> 00:06:04,599 Speaker 2: and they pay no tax on those profits. In the 90 00:06:04,680 --> 00:06:08,600 Speaker 2: CEO I think made somewhere around twelve million dollars that year. 91 00:06:09,120 --> 00:06:11,560 Speaker 2: There aren't a lot of baseball players who make twelve 92 00:06:11,600 --> 00:06:15,200 Speaker 2: million dollars a year, and here we have a quote 93 00:06:15,400 --> 00:06:19,120 Speaker 2: nonprofit ceo making that much money. So it really kind 94 00:06:19,160 --> 00:06:22,080 Speaker 2: of builds a lie around this whole notion of nonprofit 95 00:06:22,320 --> 00:06:24,360 Speaker 2: and I think that we ought to quit using that 96 00:06:24,480 --> 00:06:28,000 Speaker 2: and just simply say taxpayers subsidized instead. 97 00:06:28,240 --> 00:06:31,039 Speaker 1: Can you make a point which I frankly did not 98 00:06:31,240 --> 00:06:35,240 Speaker 1: know at all. I'm surprised by that this actually goes 99 00:06:35,279 --> 00:06:38,120 Speaker 1: all the way back to nineteen oh nine when they 100 00:06:38,120 --> 00:06:41,680 Speaker 1: were developing the corporate income tax separate from the individual 101 00:06:41,680 --> 00:06:45,200 Speaker 1: income tax that they actually deliberately put in a provision, 102 00:06:46,160 --> 00:06:50,640 Speaker 1: but at the time they thought they were protecting very small, weak, 103 00:06:51,200 --> 00:06:57,080 Speaker 1: collective organizations such as fraternal societies, helping widows and tending 104 00:06:57,120 --> 00:07:01,000 Speaker 1: to the poor. You quote from Center Co Crawford of 105 00:07:01,400 --> 00:07:04,640 Speaker 1: South Dakota in the nineteen oh nine debreed, who warns, 106 00:07:05,440 --> 00:07:08,760 Speaker 1: once you started letting them make profits as nonprofits, it's 107 00:07:08,800 --> 00:07:11,280 Speaker 1: all going to grow. Yeah. 108 00:07:11,360 --> 00:07:14,400 Speaker 2: That was pretty precedent, wasn't it. You know, it's interesting 109 00:07:14,440 --> 00:07:17,680 Speaker 2: that that whole debate over nonprofits, so much of it 110 00:07:17,760 --> 00:07:21,120 Speaker 2: was really based on the norms of the late eighteen hundreds, 111 00:07:21,480 --> 00:07:24,960 Speaker 2: when we did have a lot of these social self 112 00:07:25,000 --> 00:07:29,360 Speaker 2: help type organizations, whether they were savings and loans or 113 00:07:29,400 --> 00:07:32,720 Speaker 2: credit unions, things like that, that started out as truly 114 00:07:32,840 --> 00:07:35,520 Speaker 2: self help, and as you mentioned, some of these mutual 115 00:07:35,560 --> 00:07:38,960 Speaker 2: aid societies that were meant to help widows, orphans in 116 00:07:39,000 --> 00:07:44,040 Speaker 2: the poor. However, those got ingrained, they kind of allowed 117 00:07:44,080 --> 00:07:47,760 Speaker 2: this slippery slope in which they opened the door to 118 00:07:48,120 --> 00:07:52,040 Speaker 2: big businesses. And as those senators and others warned at 119 00:07:52,080 --> 00:07:56,200 Speaker 2: the time, you know, guess what, folks, my fellow senators, 120 00:07:56,680 --> 00:07:58,800 Speaker 2: in time, people are going to come to us and say, 121 00:07:58,880 --> 00:08:01,200 Speaker 2: we too are a mutual will help society or a 122 00:08:01,280 --> 00:08:04,040 Speaker 2: mutual aid society or a credit union, and we ought 123 00:08:04,040 --> 00:08:07,800 Speaker 2: to be exempt as well. And we saw the doors open. 124 00:08:07,880 --> 00:08:11,000 Speaker 2: So just a few years after they created this tax 125 00:08:11,040 --> 00:08:14,720 Speaker 2: exemption in nineteen oh nine, by nineteen thirteen, when they 126 00:08:14,800 --> 00:08:18,920 Speaker 2: created the personal income tax, they expanded the window of 127 00:08:19,320 --> 00:08:22,760 Speaker 2: or the opportunities for nonprofits. They did it again in 128 00:08:22,760 --> 00:08:26,880 Speaker 2: twenty sixteen and eighteen and so on, and it began 129 00:08:26,960 --> 00:08:31,080 Speaker 2: to expand. So then you had tax exempt electric companies 130 00:08:31,240 --> 00:08:35,520 Speaker 2: and sewer companies and other big businesses that grew out 131 00:08:35,520 --> 00:08:39,400 Speaker 2: of that entire experience. Credit unions today, for instance, have 132 00:08:39,840 --> 00:08:44,120 Speaker 2: over two trillion dollars worth of net assets. They're essentially 133 00:08:44,360 --> 00:08:47,160 Speaker 2: commercial banks masquerading as nonprofits. 134 00:08:47,600 --> 00:08:47,840 Speaker 1: Man. 135 00:08:47,920 --> 00:08:50,480 Speaker 2: You know, in their time they may have served a 136 00:08:50,600 --> 00:08:54,240 Speaker 2: useful function for people who were unbanked, but that's no 137 00:08:54,320 --> 00:08:57,160 Speaker 2: longer the case, and so they ought to grow up 138 00:08:57,559 --> 00:09:02,240 Speaker 2: and essentially graduate from government subsidie they've enjoyed for over 139 00:09:02,320 --> 00:09:03,199 Speaker 2: ninety years. 140 00:09:03,800 --> 00:09:07,079 Speaker 1: Why does the Academy of Motion Picture Arts and Sciences, 141 00:09:07,679 --> 00:09:12,200 Speaker 1: who earned one hundred and forty seven million dollars in 142 00:09:12,280 --> 00:09:15,679 Speaker 1: twenty twenty three. Yeah, and they're a nonprofit. 143 00:09:16,600 --> 00:09:21,160 Speaker 2: Yeah, they're considered a business league or a membership organization. 144 00:09:21,679 --> 00:09:24,520 Speaker 2: In our parlance, they're a five to zho win C 145 00:09:24,840 --> 00:09:29,199 Speaker 2: four and so as a result, they're nonprofit, like an 146 00:09:29,240 --> 00:09:32,360 Speaker 2: interest group, if you will. And so when they sell 147 00:09:32,400 --> 00:09:35,840 Speaker 2: the rights to things like the Academy Awards or you 148 00:09:35,880 --> 00:09:38,880 Speaker 2: get the other groups that have the Grammys, all of 149 00:09:38,920 --> 00:09:43,120 Speaker 2: those are nonprofit organizations, and all of the TV revenues 150 00:09:43,120 --> 00:09:46,400 Speaker 2: they get is tax free. What's interesting about this from 151 00:09:46,400 --> 00:09:49,360 Speaker 2: a tax perspective is that it's what we in the 152 00:09:49,400 --> 00:09:52,760 Speaker 2: business call double non tax income. And what that means 153 00:09:52,920 --> 00:09:56,959 Speaker 2: is that when ABC pays the Academy they're one hundred 154 00:09:56,960 --> 00:09:59,640 Speaker 2: and forty seven million dollars. They get to deduct that 155 00:09:59,679 --> 00:10:02,680 Speaker 2: as a business expense because that was part of their 156 00:10:02,760 --> 00:10:07,079 Speaker 2: operating business. However, when the Academy gets that one hundred 157 00:10:07,080 --> 00:10:09,280 Speaker 2: and forty seven million, it doesn't pay tax on it, 158 00:10:09,440 --> 00:10:11,960 Speaker 2: so that money is completely out of the tax system 159 00:10:12,320 --> 00:10:14,760 Speaker 2: and effectively subsidized by the rest of us. 160 00:10:15,240 --> 00:10:18,920 Speaker 1: If I'm a for profit hospital and I'm across the 161 00:10:18,960 --> 00:10:23,360 Speaker 1: street from a not for profit hospital, I'm actually paying 162 00:10:23,440 --> 00:10:27,640 Speaker 1: extra taxes in order to subsidize them not paying taxes 163 00:10:28,240 --> 00:10:30,280 Speaker 1: while we're delivering the same service. 164 00:10:30,800 --> 00:10:33,840 Speaker 2: And not only competing on a business to business basis, 165 00:10:33,880 --> 00:10:37,880 Speaker 2: but effectively subsidize in your competitors. And so when I 166 00:10:37,920 --> 00:10:41,319 Speaker 2: talk about the fact that this undermines our free enterprise system, 167 00:10:41,640 --> 00:10:44,320 Speaker 2: that's really the heart of it. And we see it 168 00:10:44,360 --> 00:10:47,920 Speaker 2: in so many different ways. Small businesses, small community banks, 169 00:10:47,920 --> 00:10:52,320 Speaker 2: for instances, are being purchased by credit unions, which I 170 00:10:52,440 --> 00:10:56,640 Speaker 2: kind of liken to your YMCA buying Gold's gym. It 171 00:10:56,840 --> 00:10:59,920 Speaker 2: just doesn't make any sense why a nonprofit would buy 172 00:11:00,000 --> 00:11:03,840 Speaker 2: a for profit bank and then take it essentially out 173 00:11:03,840 --> 00:11:06,920 Speaker 2: of the tax system. So here you had a profit 174 00:11:07,000 --> 00:11:10,720 Speaker 2: making bank, one paying taxes both to the federal level 175 00:11:10,720 --> 00:11:14,400 Speaker 2: but also to your state and local communities, and now 176 00:11:14,440 --> 00:11:18,359 Speaker 2: it's being purchased by a nonprofit and essentially being made nonprofit, 177 00:11:18,840 --> 00:11:22,360 Speaker 2: and so the government loses, communities lose as a result, 178 00:11:22,679 --> 00:11:24,080 Speaker 2: and I don't think that's fair. 179 00:11:24,480 --> 00:11:27,679 Speaker 1: Can you suggest that if you simply applied the same 180 00:11:27,720 --> 00:11:33,120 Speaker 1: corporate rate to the nonprofits, you would generate about fifty 181 00:11:33,160 --> 00:11:34,800 Speaker 1: one billion dollars a year. 182 00:11:36,120 --> 00:11:39,120 Speaker 2: Yes, And that's the kind of new revenue that does 183 00:11:39,160 --> 00:11:42,960 Speaker 2: not hurt the economy. It doesn't depress incomes, like if 184 00:11:43,000 --> 00:11:46,080 Speaker 2: you were to raise personal income taxes or raise the 185 00:11:46,120 --> 00:11:50,559 Speaker 2: corporate tax on other businesses. Essentially expands the tax base 186 00:11:50,600 --> 00:11:54,439 Speaker 2: in a way that is neutral, it's fair, It levels 187 00:11:54,480 --> 00:11:57,320 Speaker 2: the playing field, and it does so and I think 188 00:11:57,360 --> 00:12:01,800 Speaker 2: in the most economically sensible way. It makes some of 189 00:12:01,840 --> 00:12:06,400 Speaker 2: the biggest businesses in America pay their fair share while 190 00:12:06,440 --> 00:12:11,320 Speaker 2: putting them out equal terms with their for profit competitors. 191 00:12:26,880 --> 00:12:29,760 Speaker 1: Somebody who introduces this bill is going to have an 192 00:12:29,800 --> 00:12:31,760 Speaker 1: amazing number of groups against them. 193 00:12:32,559 --> 00:12:35,840 Speaker 2: Yeah, every hospital in their district is going to come 194 00:12:35,880 --> 00:12:39,520 Speaker 2: out of the woodwork and lobby against it. Every credit union, 195 00:12:40,360 --> 00:12:42,439 Speaker 2: you can only imagine, and they're going to want to 196 00:12:42,520 --> 00:12:46,320 Speaker 2: keep those preferences that they have now. And it's going 197 00:12:46,360 --> 00:12:48,600 Speaker 2: to take an awful lot of courage to change this. 198 00:12:48,960 --> 00:12:52,520 Speaker 2: But Congress has done this before. I should mention in 199 00:12:52,640 --> 00:12:56,880 Speaker 2: nineteen fifty one, it eliminated the tax exemption for certain 200 00:12:56,960 --> 00:13:02,200 Speaker 2: types of savings banks and home owned banks. In other times, 201 00:13:02,240 --> 00:13:06,600 Speaker 2: it's reduced the tax exemption for things like TIA, KREF 202 00:13:06,840 --> 00:13:09,719 Speaker 2: and some of the Blue Cross Blue Shield. So there 203 00:13:09,760 --> 00:13:13,800 Speaker 2: have been times in which Congress has pulled back those 204 00:13:14,160 --> 00:13:19,120 Speaker 2: tax exemptions because they believe that those industries were unfairly 205 00:13:19,160 --> 00:13:23,400 Speaker 2: competing with for profit firms, and it's just a matter 206 00:13:23,480 --> 00:13:26,960 Speaker 2: of taking that on again. We've seen hearings every couple 207 00:13:27,120 --> 00:13:30,439 Speaker 2: of decades. Two thousand and six there were a series 208 00:13:30,480 --> 00:13:34,560 Speaker 2: of hearings about the unfair competition between nonprofits and for profits. 209 00:13:34,960 --> 00:13:37,320 Speaker 2: We saw it about a decade ago, as well as 210 00:13:37,440 --> 00:13:41,240 Speaker 2: Senator Grassley and others held hearings about this. So it's 211 00:13:41,280 --> 00:13:44,120 Speaker 2: always been on the mind of Congress. They've held lots 212 00:13:44,160 --> 00:13:47,480 Speaker 2: of hearings, but they haven't always taken that next step 213 00:13:47,920 --> 00:13:52,760 Speaker 2: to pull back this tax subsidy for these big businesses. 214 00:13:53,240 --> 00:13:56,320 Speaker 1: One of examples that I think is fascinating you point 215 00:13:56,360 --> 00:14:02,120 Speaker 1: out that the PGA Tour and the United States Tendis 216 00:14:02,160 --> 00:14:08,920 Speaker 1: Association are still nonprofits, but both the NFL and Major 217 00:14:09,000 --> 00:14:12,400 Speaker 1: League Baseball gave up that status. Let me start with 218 00:14:12,640 --> 00:14:16,599 Speaker 1: the folks who did. Why did football and baseball do 219 00:14:16,679 --> 00:14:18,600 Speaker 1: ave up their nonprofit status? 220 00:14:19,760 --> 00:14:24,000 Speaker 2: In many respects, it was simply embarrassment. Members of Congress 221 00:14:24,000 --> 00:14:26,720 Speaker 2: have been calling on them. They used to be what 222 00:14:26,760 --> 00:14:29,800 Speaker 2: were called five oh one c six organizations. Those are 223 00:14:30,240 --> 00:14:33,320 Speaker 2: business leagues, kind of like the Chamber of Commerce and 224 00:14:33,360 --> 00:14:37,400 Speaker 2: things like that, and members of Congress had railed against 225 00:14:37,440 --> 00:14:40,560 Speaker 2: them because they number one, they saw the billions of 226 00:14:40,640 --> 00:14:44,280 Speaker 2: dollars that were flowing into those sports and entertainment businesses, 227 00:14:44,480 --> 00:14:47,040 Speaker 2: but they also saw the kind of money that the 228 00:14:47,120 --> 00:14:51,880 Speaker 2: executives were earning at the NFL and MLB, and so finally, 229 00:14:51,920 --> 00:14:55,440 Speaker 2: I think both of those organizations realized that politically they 230 00:14:55,480 --> 00:14:58,760 Speaker 2: had to change and become a real for profit business. 231 00:14:59,080 --> 00:15:02,000 Speaker 2: And much of what they do anyways, channeled billions of 232 00:15:02,040 --> 00:15:07,000 Speaker 2: dollars worth of TV revenues and sponsorships to their teams, 233 00:15:07,360 --> 00:15:10,240 Speaker 2: who also pay tax on the income that they earn. 234 00:15:10,480 --> 00:15:14,640 Speaker 2: And really that's what we see unfortunately with things like 235 00:15:15,120 --> 00:15:19,400 Speaker 2: the golfers and tennis and even the drag racing, things 236 00:15:19,480 --> 00:15:23,760 Speaker 2: like that are still hiding behind that business league nonprofit, 237 00:15:24,120 --> 00:15:26,080 Speaker 2: and it's time for them to own up and become 238 00:15:26,120 --> 00:15:29,280 Speaker 2: the real sports and entertainment businesses they are and pay 239 00:15:29,360 --> 00:15:32,280 Speaker 2: taxes like everybody else. And one last note on that, 240 00:15:32,480 --> 00:15:37,239 Speaker 2: it's interesting that pro basketball, the NBA was never a nonprofit, 241 00:15:37,680 --> 00:15:41,040 Speaker 2: so it started out as a commercial operation and was 242 00:15:41,080 --> 00:15:43,560 Speaker 2: never a nonprofit. I think that's kind of a fascinating 243 00:15:43,600 --> 00:15:44,480 Speaker 2: story by itself. 244 00:15:44,600 --> 00:15:47,840 Speaker 1: It's interesting that they made the decision and recently you 245 00:15:47,840 --> 00:15:50,680 Speaker 1: go back and look at the minutes of how they 246 00:15:50,720 --> 00:15:56,520 Speaker 1: made that decision. When you look at this, why shouldn't 247 00:15:57,160 --> 00:16:02,400 Speaker 1: both CONGA and to a cent association, Why shouldn't they 248 00:16:02,400 --> 00:16:05,720 Speaker 1: become for a profit? I mean they are for. 249 00:16:05,760 --> 00:16:10,640 Speaker 2: Profit indeed, and you know, we see tens of millions 250 00:16:10,680 --> 00:16:13,760 Speaker 2: of not hundreds of millions of dollars going into those 251 00:16:14,480 --> 00:16:19,680 Speaker 2: businesses through sponsorships and Holstein tournaments and whatnot, and so 252 00:16:19,760 --> 00:16:24,160 Speaker 2: they are effectively sports and entertainment businesses. And again they 253 00:16:24,160 --> 00:16:26,720 Speaker 2: may have started out as sort of a club or 254 00:16:27,160 --> 00:16:30,280 Speaker 2: a league of sorts, but they've really turned into businesses. 255 00:16:30,320 --> 00:16:31,800 Speaker 2: It might be treated that way. 256 00:16:32,120 --> 00:16:36,640 Speaker 1: Given how we're watching the evolution of college sports. Shouldn't 257 00:16:36,640 --> 00:16:41,240 Speaker 1: that pretty soon? Also applied essentially like the SEC is 258 00:16:41,280 --> 00:16:44,240 Speaker 1: a television negotiating system. 259 00:16:44,360 --> 00:16:47,640 Speaker 2: That's exactly right. They perform really the same function as 260 00:16:47,680 --> 00:16:51,360 Speaker 2: the professional sports leagues like the NFL and MLB, and 261 00:16:51,360 --> 00:16:55,240 Speaker 2: that they negotiate these big TV contracts and then funnel 262 00:16:55,480 --> 00:16:59,680 Speaker 2: those profits down to their members. And we're seeing a 263 00:16:59,680 --> 00:17:05,200 Speaker 2: lot of these universities turn their athletic programs into professional 264 00:17:05,240 --> 00:17:09,159 Speaker 2: sports programs. In fact, Rutgers was the most recent to 265 00:17:09,200 --> 00:17:13,840 Speaker 2: announce that it was creating an LLC business and putting 266 00:17:14,040 --> 00:17:18,760 Speaker 2: its entire athletic department in that new LLC, so that 267 00:17:18,840 --> 00:17:21,840 Speaker 2: it could raise more money, especially corporate money, to be 268 00:17:21,840 --> 00:17:25,520 Speaker 2: able to pay the athletes as is now allowed and 269 00:17:25,640 --> 00:17:29,439 Speaker 2: funnel some of that nil money to the athletes as well. 270 00:17:29,880 --> 00:17:33,600 Speaker 2: And other universities have been doing this recently. The University 271 00:17:33,600 --> 00:17:37,240 Speaker 2: of Utah just signed a big, almost half billion dollar 272 00:17:37,400 --> 00:17:42,600 Speaker 2: deal with a private equity firm to manage its sports 273 00:17:42,880 --> 00:17:46,239 Speaker 2: program and so the job of the firm is to 274 00:17:46,520 --> 00:17:51,240 Speaker 2: raise more money through advertising and other things, endorsements for 275 00:17:51,400 --> 00:17:54,640 Speaker 2: the athletic department. This is the wave of the future 276 00:17:54,840 --> 00:17:58,719 Speaker 2: in college athletics, and no one's yet talking about. I mean, 277 00:17:58,760 --> 00:18:02,440 Speaker 2: it's sort of behind the surf, but it's quietly happening 278 00:18:02,520 --> 00:18:04,480 Speaker 2: in front of us, and I think we just need 279 00:18:04,520 --> 00:18:07,000 Speaker 2: to recognize that this is where the things are going, 280 00:18:07,320 --> 00:18:10,160 Speaker 2: and let's just say it's time for them to go pro. 281 00:18:10,800 --> 00:18:13,160 Speaker 1: With all the various changes we've seen in the last 282 00:18:13,160 --> 00:18:17,320 Speaker 1: three or four years, these are clearly now almost like 283 00:18:17,400 --> 00:18:21,439 Speaker 1: the Triple A baseball feeder system and baseball men to 284 00:18:21,520 --> 00:18:24,640 Speaker 1: go to college in order to increase your net value 285 00:18:25,080 --> 00:18:28,520 Speaker 1: when you get drafted. It's a totally different model. 286 00:18:28,800 --> 00:18:32,280 Speaker 2: It is, but the real challenge that everyone is wrestling 287 00:18:32,359 --> 00:18:35,280 Speaker 2: with is what do you do about non revenue sports? 288 00:18:35,359 --> 00:18:38,840 Speaker 2: We all know that football is the big moneymaker, Basketball 289 00:18:38,960 --> 00:18:42,000 Speaker 2: is the big moneymaker, but what do you do about gymnastics? 290 00:18:42,280 --> 00:18:45,880 Speaker 2: What do you do about crew or rowing or archery 291 00:18:45,960 --> 00:18:47,720 Speaker 2: and some of these other things that may have a 292 00:18:47,720 --> 00:18:51,800 Speaker 2: competitive element, but they're not the kind of revenue generating 293 00:18:52,440 --> 00:18:55,640 Speaker 2: activities that you see from the big ones. And then 294 00:18:55,680 --> 00:18:58,399 Speaker 2: the other worry is about Title nine and how do 295 00:18:58,440 --> 00:19:02,479 Speaker 2: you make sure that women's are equally funded as well. 296 00:19:02,840 --> 00:19:05,639 Speaker 2: So these are some of the more challenging questions that 297 00:19:05,680 --> 00:19:09,119 Speaker 2: are being faced by these athletic directors, and members of 298 00:19:09,119 --> 00:19:10,840 Speaker 2: Congress are dealing with us as well. There are a 299 00:19:10,920 --> 00:19:13,719 Speaker 2: number of bills to try to organize some of this 300 00:19:13,880 --> 00:19:16,720 Speaker 2: and try to bring some reason to the process, But 301 00:19:16,880 --> 00:19:20,080 Speaker 2: there's some really nettlesome challenges that we're going to have 302 00:19:20,160 --> 00:19:22,320 Speaker 2: to overcome the process. 303 00:19:22,359 --> 00:19:24,520 Speaker 1: It seems to me you may end up in a 304 00:19:24,600 --> 00:19:29,280 Speaker 1: system where all of the sort of secondary sports are 305 00:19:29,320 --> 00:19:32,560 Speaker 1: paid for out of the activity fee of the university. 306 00:19:33,280 --> 00:19:35,720 Speaker 2: Maybe I think it'll be interesting to see how this 307 00:19:35,840 --> 00:19:39,879 Speaker 2: shakes out, because so far, when save the University of 308 00:19:39,960 --> 00:19:44,520 Speaker 2: Kentucky or even Utah put their athletic department into these 309 00:19:44,960 --> 00:19:49,399 Speaker 2: LLC companies. They put the entire department in there. They 310 00:19:49,440 --> 00:19:52,920 Speaker 2: didn't hive off football and basketball. They put the entire 311 00:19:53,000 --> 00:19:55,800 Speaker 2: program there. So it will be interesting to see if 312 00:19:55,840 --> 00:19:59,840 Speaker 2: they can subsidize all of it through these more lucrative 313 00:20:00,359 --> 00:20:03,320 Speaker 2: that they're getting from both football and basketball. 314 00:20:03,480 --> 00:20:06,120 Speaker 1: Well, and you also now have the income to the students. 315 00:20:07,520 --> 00:20:10,600 Speaker 1: That's a story that's going to unfold over the next 316 00:20:10,600 --> 00:20:13,320 Speaker 1: five or ten years. We do not understand the path 317 00:20:13,400 --> 00:20:14,040 Speaker 1: we're now on. 318 00:20:15,359 --> 00:20:18,000 Speaker 2: You know. And the interesting thing there is that the 319 00:20:18,080 --> 00:20:22,320 Speaker 2: NCAA is seeking anti trust protection and they don't want 320 00:20:22,359 --> 00:20:28,160 Speaker 2: to call these athletes employees. They want to essentially treat 321 00:20:28,200 --> 00:20:32,800 Speaker 2: them as uber drivers, so they're contractors that we're paying, 322 00:20:32,880 --> 00:20:36,439 Speaker 2: but they're not employees. And I think that that is 323 00:20:36,600 --> 00:20:39,080 Speaker 2: probably going to lead us down the path where these 324 00:20:39,119 --> 00:20:41,880 Speaker 2: athletes are going to unionize and we're going to see 325 00:20:41,920 --> 00:20:45,320 Speaker 2: some measure of collective bargaining at the end of the day, 326 00:20:45,400 --> 00:20:47,639 Speaker 2: much like we see in professional sports. 327 00:20:47,560 --> 00:20:50,600 Speaker 1: But militates against that as you're only there for a 328 00:20:50,640 --> 00:20:54,320 Speaker 1: short time. You come in and your real job is 329 00:20:54,400 --> 00:20:59,080 Speaker 1: to maximize future revenue. So you have to think if 330 00:20:59,080 --> 00:21:01,560 Speaker 1: I had too active as union member. Does he get 331 00:21:01,560 --> 00:21:02,880 Speaker 1: harder for me to get drafted? 332 00:21:03,760 --> 00:21:06,560 Speaker 2: Yeah, I never thought about that. That's an interesting one. 333 00:21:06,680 --> 00:21:08,320 Speaker 2: I don't know how this is going to play out. 334 00:21:08,640 --> 00:21:11,760 Speaker 1: We've entered down a trail and I've always felt sympathetic 335 00:21:11,880 --> 00:21:15,560 Speaker 1: because they're the reason people are there, They're the reason 336 00:21:15,640 --> 00:21:19,639 Speaker 1: television's there. But from all these years, they were clearly 337 00:21:19,640 --> 00:21:21,760 Speaker 1: the people who didn't get the money. I mean, it 338 00:21:21,960 --> 00:21:25,760 Speaker 1: was a very strange system, largely driven I think by 339 00:21:25,800 --> 00:21:29,160 Speaker 1: television and the sheer amount of money that you can 340 00:21:29,240 --> 00:21:31,720 Speaker 1: now get out of TV contracts, and. 341 00:21:31,640 --> 00:21:33,880 Speaker 2: The folks who did get the money are the coaches. 342 00:21:34,400 --> 00:21:38,800 Speaker 2: And then we get these ridiculous buyouts that have embarrassed 343 00:21:38,800 --> 00:21:42,480 Speaker 2: I think the entire system. Lane Kiffen and others are 344 00:21:42,520 --> 00:21:46,719 Speaker 2: getting these enormous deals, but they're predecessors like Brian Kelly 345 00:21:46,800 --> 00:21:51,080 Speaker 2: and LSU gets a fifty four million dollar buyout paid 346 00:21:51,160 --> 00:21:53,720 Speaker 2: for by one donor, by the way, and so that's 347 00:21:53,760 --> 00:21:57,240 Speaker 2: another obscene element to this, is that this guy gets 348 00:21:57,280 --> 00:22:02,480 Speaker 2: a tax deduction for buying out the contract to this coach. 349 00:22:02,960 --> 00:22:06,600 Speaker 2: It's just nuts. There was a recent report by the 350 00:22:06,720 --> 00:22:11,159 Speaker 2: Night Commission on Athletics finding that all of these buyouts 351 00:22:11,160 --> 00:22:14,400 Speaker 2: from last year totaled well over two hundred million dollars. 352 00:22:15,080 --> 00:22:19,160 Speaker 2: That's just obscene, and that's being done largely through tax 353 00:22:19,240 --> 00:22:21,560 Speaker 2: deductible donations from boosters. 354 00:22:22,240 --> 00:22:26,000 Speaker 1: But it's also a function that the sports have become 355 00:22:26,080 --> 00:22:31,679 Speaker 1: that central to our culture and they're really big businesses, yes, 356 00:22:31,960 --> 00:22:35,359 Speaker 1: very much so. The former head coach Alabama had a 357 00:22:35,440 --> 00:22:38,120 Speaker 1: rule of his contracts that he would always be paid 358 00:22:38,200 --> 00:22:41,399 Speaker 1: one dollar more than whoever the highest paid coach in 359 00:22:41,440 --> 00:22:45,640 Speaker 1: America was, and so he never negotiated for his own salary. 360 00:22:45,920 --> 00:22:48,760 Speaker 1: He just hoped somebody out there was doing well, and 361 00:22:48,840 --> 00:22:51,840 Speaker 1: he would automatically go up whenever that was announced. 362 00:22:52,600 --> 00:22:53,639 Speaker 2: I want a deal like that. 363 00:22:55,680 --> 00:22:57,600 Speaker 1: I'd have been happy on ten percent of what he 364 00:22:57,680 --> 00:23:02,240 Speaker 1: was making exactly so that I can't fill stadiums and 365 00:23:02,359 --> 00:23:02,879 Speaker 1: he could. 366 00:23:03,359 --> 00:23:05,159 Speaker 2: That's the other thing, right, yeah. 367 00:23:05,000 --> 00:23:07,040 Speaker 1: Because it's real. I mean, sports at that level is 368 00:23:07,080 --> 00:23:07,879 Speaker 1: really entertainment. 369 00:23:08,960 --> 00:23:11,560 Speaker 2: Yes, But up until this point it's been an imbalance 370 00:23:11,720 --> 00:23:15,359 Speaker 2: because it's all been with free labor, and so the 371 00:23:15,400 --> 00:23:19,520 Speaker 2: money has gone to gold plated facilities and coaching salaries, 372 00:23:20,040 --> 00:23:21,919 Speaker 2: and now they're having to try to figure out, how 373 00:23:21,920 --> 00:23:24,920 Speaker 2: do we fill out this third element of our budget, 374 00:23:24,920 --> 00:23:28,280 Speaker 2: and that's paying the athletes, and that's bringing about a 375 00:23:28,320 --> 00:23:30,720 Speaker 2: whole new challenge, and I think that's why we're seeing 376 00:23:30,760 --> 00:23:34,040 Speaker 2: many of these programs begin to look at partnering with 377 00:23:34,200 --> 00:23:37,640 Speaker 2: private equity firms to bring some cash to the table. 378 00:23:37,920 --> 00:23:41,719 Speaker 2: But also what these private equity firms are bringing is 379 00:23:42,640 --> 00:23:47,399 Speaker 2: understanding how to maximize revenues and expand their revenue base. 380 00:23:47,640 --> 00:23:50,080 Speaker 2: And that's what these programs are leaning on the private 381 00:23:50,080 --> 00:23:54,760 Speaker 2: equity to bring those technical abilities and business skills to 382 00:23:54,960 --> 00:23:57,320 Speaker 2: a program in which has been run by amateurs. 383 00:23:57,359 --> 00:24:15,879 Speaker 1: Up at this point, I know you've been thinking deeply 384 00:24:15,920 --> 00:24:20,560 Speaker 1: about this, Scott, But addition to taxing the nonprofits that 385 00:24:20,560 --> 00:24:23,840 Speaker 1: are actually profit making, what other steps would you take 386 00:24:24,359 --> 00:24:26,240 Speaker 1: to help solve the deficit? 387 00:24:27,080 --> 00:24:30,840 Speaker 2: We really need fundamental tax reform. The last two tax 388 00:24:30,880 --> 00:24:36,000 Speaker 2: bills were great in many respects. The twenty seventeen tax 389 00:24:36,000 --> 00:24:38,280 Speaker 2: bill lowered the corporate tax rate and made the United 390 00:24:38,280 --> 00:24:42,600 Speaker 2: States much more competitive. That was fantastic. It simplified the 391 00:24:42,640 --> 00:24:46,680 Speaker 2: tax code for individuals by increasing the standard deduction so 392 00:24:46,720 --> 00:24:49,959 Speaker 2: that nine out of ten Americans didn't have to itemize 393 00:24:50,080 --> 00:24:54,240 Speaker 2: their taxes and their deductions. It did a lot, I 394 00:24:54,280 --> 00:24:58,800 Speaker 2: think to encourage new investment, especially capital investment, because it 395 00:24:58,880 --> 00:25:02,200 Speaker 2: improved the write off off that companies could take for 396 00:25:02,880 --> 00:25:07,320 Speaker 2: spending on capital improvements. The latest bill last year improved 397 00:25:07,359 --> 00:25:10,040 Speaker 2: on many of those things, but it actually went backwards 398 00:25:10,440 --> 00:25:14,040 Speaker 2: in some areas by adding on more complexity of the 399 00:25:14,080 --> 00:25:17,679 Speaker 2: tax code, like no taxes on tips and overtime and 400 00:25:17,720 --> 00:25:20,280 Speaker 2: things like that. So it actually made the tax code 401 00:25:20,520 --> 00:25:24,800 Speaker 2: more complicated while improving it in many other ways. I 402 00:25:24,840 --> 00:25:27,119 Speaker 2: think we need a great deal of simplification. If I 403 00:25:27,160 --> 00:25:29,879 Speaker 2: could wave a magic wand I would move to something 404 00:25:29,960 --> 00:25:33,000 Speaker 2: like a flat tax, which we saw debated with great 405 00:25:33,040 --> 00:25:35,680 Speaker 2: earnest about twenty to twenty five years ago, where people 406 00:25:35,760 --> 00:25:39,040 Speaker 2: like Dick Army and others were pushing for a flat tax, 407 00:25:39,040 --> 00:25:41,520 Speaker 2: and that is getting rid of as many of these 408 00:25:41,560 --> 00:25:44,880 Speaker 2: loopholes and deductions in the code as possible and lowering 409 00:25:44,920 --> 00:25:48,679 Speaker 2: tax rates to a low, simple rate everybody pays the 410 00:25:48,720 --> 00:25:53,200 Speaker 2: same rate with as minimal deductions and loopholes as possible. 411 00:25:53,520 --> 00:25:56,520 Speaker 2: That would be an ideal tax system to me. There 412 00:25:56,520 --> 00:25:58,800 Speaker 2: are tax systems around the world that we could emulate. 413 00:25:59,560 --> 00:26:03,080 Speaker 2: Estonia has a wonderful tax system that's very simple. I 414 00:26:03,080 --> 00:26:06,720 Speaker 2: think it's written on about eighty pages, and so it's 415 00:26:06,760 --> 00:26:09,680 Speaker 2: about as simple as you can get. It's especially good 416 00:26:09,720 --> 00:26:13,800 Speaker 2: on the corporate side because it's called a dividend pain deduction. 417 00:26:14,000 --> 00:26:17,440 Speaker 2: So when companies give out dividends, that's when they pay 418 00:26:17,480 --> 00:26:20,440 Speaker 2: taxes on it, but they can retain in their earnings 419 00:26:20,520 --> 00:26:22,919 Speaker 2: and reinvest in the business as long as they want, 420 00:26:23,440 --> 00:26:26,080 Speaker 2: and then they only pay tax when they pay dividends 421 00:26:26,119 --> 00:26:30,399 Speaker 2: to their shareholders. It's a twenty percent rate for corporations, 422 00:26:30,400 --> 00:26:33,600 Speaker 2: a twenty percent rate for individuals, and a twenty percent 423 00:26:33,680 --> 00:26:35,960 Speaker 2: rate on capital gains income. So you can see the 424 00:26:36,000 --> 00:26:39,000 Speaker 2: synergy there that everything is at twenty percent, so you 425 00:26:39,040 --> 00:26:41,840 Speaker 2: don't get the kind of arbitrage that you might get 426 00:26:41,880 --> 00:26:45,280 Speaker 2: with more complicated systems. And what we find when we 427 00:26:45,320 --> 00:26:49,560 Speaker 2: look globally, and this is really interesting, is that many 428 00:26:49,560 --> 00:26:53,280 Speaker 2: of these Eastern and Central European countries that used to 429 00:26:53,280 --> 00:26:57,040 Speaker 2: be communists have gone to these flat tax systems in 430 00:26:57,160 --> 00:27:02,160 Speaker 2: large measure not only to be more competitive and economically beneficial, 431 00:27:02,800 --> 00:27:06,800 Speaker 2: but to remove the corruption that you get with highly 432 00:27:06,840 --> 00:27:11,560 Speaker 2: complicated tax systems. And places like Georgia and Estonia and 433 00:27:11,600 --> 00:27:15,240 Speaker 2: elsewhere have moved to these low flat tax systems and 434 00:27:15,280 --> 00:27:17,919 Speaker 2: it's really reduced the amount of corruption in their system 435 00:27:17,960 --> 00:27:21,359 Speaker 2: because there's nothing to lobby on. There's nothing to trade 436 00:27:21,400 --> 00:27:24,199 Speaker 2: favors about, and I think that that's the kind of 437 00:27:24,200 --> 00:27:26,639 Speaker 2: thing that we need. And as you know about the 438 00:27:26,720 --> 00:27:30,240 Speaker 2: lobbying in Washington and how that that's become as an industry, 439 00:27:30,720 --> 00:27:33,960 Speaker 2: we'd certainly benefit by eliminating that and go into a 440 00:27:34,000 --> 00:27:38,600 Speaker 2: simple tax system that everyone can appreciate. And as Dick 441 00:27:38,720 --> 00:27:41,560 Speaker 2: Army said, a tax system I can respect and a 442 00:27:41,600 --> 00:27:42,960 Speaker 2: tax system that respects me. 443 00:27:43,359 --> 00:27:46,520 Speaker 1: I mean, you had a substantial impact that the Tax 444 00:27:46,560 --> 00:27:49,000 Speaker 1: Foundation just share with us for a couple of minutes. 445 00:27:49,400 --> 00:27:53,000 Speaker 1: What attracted you to the Tax Foundation, Why should people 446 00:27:53,080 --> 00:27:56,400 Speaker 1: pay attention to it, and what would success be as 447 00:27:56,400 --> 00:27:57,720 Speaker 1: seen by the Tax Foundation. 448 00:27:59,119 --> 00:28:01,600 Speaker 2: Well, my experience is the Tax Foundation was an incredible 449 00:28:01,600 --> 00:28:04,119 Speaker 2: part of my life. Actually, I began my career here 450 00:28:04,160 --> 00:28:07,119 Speaker 2: in Washington at the Heritage Foundation and worked on the 451 00:28:07,160 --> 00:28:09,920 Speaker 2: contract with America as we were putting that together back 452 00:28:09,920 --> 00:28:12,280 Speaker 2: in the nineties. But then I went to the Tax 453 00:28:12,280 --> 00:28:15,119 Speaker 2: Foundation in two thousand and At that point, it was 454 00:28:15,160 --> 00:28:17,879 Speaker 2: actually kind of a sleepy little organization that was falling 455 00:28:17,920 --> 00:28:20,840 Speaker 2: on hard times. I'd had six people and a million 456 00:28:20,920 --> 00:28:25,240 Speaker 2: dollar budget, and I started working with private philanthropies and 457 00:28:25,320 --> 00:28:28,840 Speaker 2: individuals to build back the organization and now it has 458 00:28:29,040 --> 00:28:33,600 Speaker 2: close to fifty staff people in an eight million dollar budget, 459 00:28:33,800 --> 00:28:36,920 Speaker 2: and we just opened an office in Brussels because we've 460 00:28:36,920 --> 00:28:40,479 Speaker 2: gone global. The tax issues are now global, and the 461 00:28:40,520 --> 00:28:42,240 Speaker 2: Tax Foundation had to be part of that. 462 00:28:42,640 --> 00:28:48,400 Speaker 1: So how does the Tax Foundation define its relationship with 463 00:28:48,800 --> 00:28:53,000 Speaker 1: tax policy? What is success as seen by the Tax Foundation? 464 00:28:53,680 --> 00:28:57,600 Speaker 2: Our philosophy is based on some core principles of tax policy. 465 00:28:58,000 --> 00:29:02,240 Speaker 2: Taxes should be neutral. We shouldn't use taxes to benefit 466 00:29:02,320 --> 00:29:05,800 Speaker 2: some and punish others. That should simply level the playing field. 467 00:29:06,200 --> 00:29:10,960 Speaker 2: Taxes should be simple, easy to comply with, easy to administer. 468 00:29:11,520 --> 00:29:14,520 Speaker 2: Taxes should be predictable. You ought to be able to 469 00:29:14,560 --> 00:29:16,120 Speaker 2: know what you're going to pay not only now, but 470 00:29:16,240 --> 00:29:19,120 Speaker 2: ten years from now and have that level of stability. 471 00:29:19,120 --> 00:29:21,320 Speaker 2: And then there should be some transparency. You should know 472 00:29:21,360 --> 00:29:24,640 Speaker 2: why you're paying taxes and who you're paying taxes to, 473 00:29:25,440 --> 00:29:28,240 Speaker 2: and what it's the purpose of the taxes that you're paying. 474 00:29:28,720 --> 00:29:31,440 Speaker 2: And with those core principles, we set out to try 475 00:29:31,480 --> 00:29:36,440 Speaker 2: to analyze current tax policy but also provide guidance for 476 00:29:36,720 --> 00:29:40,280 Speaker 2: lawmakers not just in Washington, but also at the state 477 00:29:40,360 --> 00:29:43,480 Speaker 2: level and now at the international level, to guide them 478 00:29:43,640 --> 00:29:48,320 Speaker 2: toward pro growth, sensible tax policy that benefits both the 479 00:29:48,400 --> 00:29:52,920 Speaker 2: economy but more importantly, taxpayers themselves, and to build the 480 00:29:53,000 --> 00:29:58,719 Speaker 2: kind of economy that builds higher living standards and increases 481 00:29:58,760 --> 00:30:01,560 Speaker 2: the well being of people. And so it's not just 482 00:30:01,640 --> 00:30:04,120 Speaker 2: you know, we're going to make a rich society, but 483 00:30:04,200 --> 00:30:07,400 Speaker 2: we want to have tax policy that allows people to 484 00:30:07,480 --> 00:30:10,600 Speaker 2: increase their standard of living over time and to build 485 00:30:10,640 --> 00:30:14,160 Speaker 2: real wealth for themselves and their families, and to foster 486 00:30:14,440 --> 00:30:18,240 Speaker 2: innovation and entrepreneurship. And tax policy can do that if 487 00:30:18,280 --> 00:30:19,480 Speaker 2: structured in the right way. 488 00:30:20,200 --> 00:30:24,000 Speaker 1: That's great, that's really helpful. Listen, this has been fascinating. 489 00:30:24,360 --> 00:30:27,240 Speaker 1: You and I have opened enough different cans of worms 490 00:30:27,280 --> 00:30:30,840 Speaker 1: here that we could do a separate podcast on about 491 00:30:30,840 --> 00:30:33,840 Speaker 1: six different items just based on the things you look 492 00:30:33,880 --> 00:30:38,080 Speaker 1: at and work on. I really commend you for thinking creatively, 493 00:30:38,400 --> 00:30:40,520 Speaker 1: and I hope you'll spend some time on this whole 494 00:30:40,920 --> 00:30:43,640 Speaker 1: College Athlete because I think it's going to become a 495 00:30:43,760 --> 00:30:47,400 Speaker 1: really very complicated mess in the not too distant future. 496 00:30:47,880 --> 00:30:50,760 Speaker 1: But Scott, I really really am grateful that you would 497 00:30:50,760 --> 00:30:52,640 Speaker 1: spend this kind of time and share with us. 498 00:30:53,200 --> 00:30:55,560 Speaker 2: It's been a great pleasure. I appreciate it, and thank 499 00:30:55,560 --> 00:30:56,160 Speaker 2: you very much. 500 00:31:00,120 --> 00:31:04,040 Speaker 1: I guess Scott Hodge. Newtsworld is produced by Ginger Street 501 00:31:04,080 --> 00:31:08,960 Speaker 1: sixty and iHeartMedia. Our executive producers Guarnsey Sloan. Our researcher 502 00:31:09,000 --> 00:31:12,000 Speaker 1: is Rachel Peterson. The artwork for the show is created 503 00:31:12,000 --> 00:31:15,080 Speaker 1: by Steve Penley. Special thanks to the team at gingrish 504 00:31:15,120 --> 00:31:18,400 Speaker 1: three sixty. If you've been enjoying Newsworld, I hope you'll 505 00:31:18,400 --> 00:31:21,120 Speaker 1: go to Apple Podcast and both rate us with five 506 00:31:21,160 --> 00:31:24,520 Speaker 1: stars and give us a review so others can learn 507 00:31:24,560 --> 00:31:28,280 Speaker 1: what it's all about. Join me on substat at gingristree 508 00:31:28,280 --> 00:31:32,000 Speaker 1: sixty dot NEP. I'm Newt Gingrich. This is Newtsworld.