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State lawmakers passing bills to try to give ol’ Homestate U a leg-up in recruiting isn’t anything earth-shattering. Some states, like New Mexico, consider direct state appropriations to help fund the athletic department. For a while, various states competed to pass NIL bills to appear more permissive than neighboring states. Then, they tried to repeal those bills…then tweak them to allow for schools to directly pay athletes without the NCAA getting involved.

To me, I think most of these state bills are born out of an explicit desire to help a few specific schools in recruiting, not from any ideological support of free market capitalism, or coherent belief structure about economic rights. Fine, whatever. Beyond the initial state bills that pressured the NCAA to permit NIL compensation at all, I don’t think most of the state NIL laws actually matter.

But a new front has opened up in the college athlete recruiting wars…taxation. And unlike squabbling over NIL reporting requirements or whether high school athletes can accept donor money, I think these bills actually matter.

Last week, lawmakers in Alabama proposed a bill that would exempt athletes from having to pay state income taxes on NIL earnings. Lawmakers in Georgia submitted a similar bill.

And now, a state rep in my home state of Illinois has pitched the same thing, a bill that would exempt college athlete NIL earnings from state income taxes.

The argument from all three states is similar. Some states, like Tennessee and Florida, do not have state income taxes for anybody. So if an athlete was slated to earn $200,000 from Illinois, Auburn and Florida State, well, they’d be able to keep more of their money at FSU. Thus, Florida would have a recruiting advantage, sign better players, win more championships, etc. Rep. Weaver, speaking to CBS, tried to justify the tax loophole like this:

I think this is a terrible argument for two main reasons.

Let’s say, for example, that these lawmakers are correct. High income taxes put the state at a disadvantage when it comes to recruiting and retaining elite athletes. But then that would be true for recruiting and retaining nearly anybody else.

You know who else can pick between hypothetical job offers in multiple states? College professors! Engineers! Firefighters! Entrepreneurs! Tons and tons of other people!

What on earth is the prevailing state interest to make sure that basketball players don’t have to pay a particular tax, but everybody else does? If anything, a college athlete is less likely to buy a home, less likely to employ other people, and more likely to be transient in the next few years, compared to other high earners. If the state is going to cut taxes to try to recruit and retain a particular type of high-demand, high-income worker…it seems like “college athlete” would not be near the top of the list.

This also isn’t likely to be a policy that changes enough recruiting decisions to stimulate a larger economic impact…but it is large enough to set a terrible precedent.

The difference between a state income tax and no state income tax can be a significant amount of money for a professional athlete who signs a multi-year contract with a seven-figure annual salary.

But that isn’t generally what we’re talking about with college athletes, even highly recruited college athletes. A college destination is only for a few years before ultimately pursuing a professional career elsewhere, and between the direct payments from universities and whatever other deals get brokered “above the cap”, we’re mostly talking about six figure contracts, not seven.

Via the CBS story:

At least, not somebody with competent representation. So this sort of tax cut is betting that enough athletes will be swayed over a $5-$20K tax break that it will produce enough of a recruiting advantage to improve team performance enough to create a local economic stimulus? That this helps push Illinois football into the ten-win range, selling enough hot dogs and parking spaces to offset the loss in income tax? I am, uh, deeply skeptical.

But even if we’re not talking about a lot of money for the athlete or the state, it creates another special interest carve out that I think sends a terrible message.

With these bills, lawmakers are saying “it is more important for the state to create incentives for blue-chip linebackers than it is for blue-chip company founders, teachers, police officers, software developers, emergency responders, or nearly any other profession.”

I love college sports. Dedicated my professional career to them. But I hate that message.

If a high income tax (or shoot, an income tax at all) is determined to be detrimental to the state’s ability to recruit a particular type of resident, then get rid of that particular tax for everybody.

I love that college athletes are getting money. I love that they’ll likely be getting payments directly from their athletic departments. They deserve it. But getting paid for services rendered also comes with responsibilities, like paying the taxes that make stuff like public universities possible.

Creating special carve outs, to me, is an insult to taxpayers, especially now. I hope these efforts fail.

Here’s what else we’ve been up to this week:

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Have you watched The Last Waltz recently? If not, you should probably rectify that this weekend. Or at the very least, just play this song a few times.

Thanks for reading, everybody. I’ll see you on the internet. We’ve got a big week next week.