Just In Case You Haven’t Heard Enough: The Penn State Penalties

July 25, 2012 — Leave a comment


College football fans are all abuzz about the NCAA penalties handed down against Penn State University.

As in most things sports, and especially at the ultra-emotional college level, the reactions from both sides are loud and clear.

Mark Emmert, who’s been in charge of the NCAA for just over two years, has sent a strong message that putting a football or any sports program ahead of human decency is no longer acceptable.

“One of the grave dangers stemming from our love of sports is that the sports themselves become too big to fail, indeed, too big to even challenge,” Emmert said in announcing the Penn State sanctions.

Emmert’s ruling undercuts the belief by arrogant universities that they will be the ones who are given a perpetual pass. Now that Penn State’s been whacked, it will be much easier to penalize future violators.

As to the complaint that the wrong people will pay the price, you’re correct.

Penn State’s “culture of concealment” cited by the Freeh Report, which the university itself commissioned and accepted, is gone but current students and athletes will suffer.

So who is really being punished?

With a nearly $4.3 billion operating budget, Pennsylvania State University has the financial capacity to absorb the $60 million fine assessed by the NCAA over five years without devastation, experts say.

And that’s even with university president Rodney Erickson’s assurances Monday that no tuition or tax dollars would be used to cover the penalty handed down as punishment for the school’s failure to act on child sex-abuse allegations against a former assistant football coach.

However, this will still have a negative effect on both current and former student of the university. Unfortunately that’s how punishments tend to work. Someone commits a crime or violates a rule and even if they don’t get caught and penalized, the rules are tweaked to make commission of future crimes harder and the penalties tougher for those who insist on continuing to try to avoid the rules.

Essentially, we all pay a price for someone else’s transgressions.

So why as a tax blogger with no connection at all to Penn State, are we spending so much time on this topic?

Because the general circumstances also relate to taxes, where tax-abusing sins of the fathers are routinely paid for via bigger checks to the U.S. Treasury by their children.

When taxpayers figure out a way to circumvent a tax law, tighter eligibility rules are created for future potential tax law breakers.

A tax benefit that once was relatively easy for some to get is ended or made harder to claim.

And in the case of criminal tax evasion, tougher penalties are often enacted for those who continue to try to get around the laws.

Welcome to the real world. They got away with it. We pay.

The tax arena also is almost as competitive as sports fields when it comes to protecting home field advantages. Specific individuals and industries have long taken advantage of tax laws and they are loathe to let them go.

This decided culture of tax entitlement comes from legislative pandering, especially in election years, particularly for “too big to fail” taxpayer sectors … or those which write too big not to cash campaign checks.

The bottom line is that once a tax break is put on the books, it’s damn nigh impossible to get rid of it.

Let’s hope that Representatives, Senators and the President will take a cue from Emmert and the NCAA and say enough is enough when it comes to entrenched, complicated and costly tax breaks that benefit too few taxpayers.

Let’s hope that Representatives, Senators and the President will take a cue from Emmert and the NCAA and say enough is enough when it comes to entrenched, complicated and costly tax breaks that benefit too few taxpayers.

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

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