Congress Redefines 'Gimme' for Golfers
Critics of the new tax bill have called it “a pile of pork,” pointing to the goodies handed out to businesses of all kinds, but one group that has escaped criticism are professional golfers.
The Wall Street Journal reported that 300 members of the Professional Golf Association-including multimillionaires Tiger Woods and Vijay Singh-are exempted from new rules that would cover most high-end retirement plans.
According to the WSJ article, the tax bill included goodies for all sorts of industries, such as owners of professional sports teams, tracks and National Association of Stock Car Auto Racing Inc. raceways.
In a section of the bill intended to limit corporations' use of deferred compensation plans, an exemption is included for any plan “established or maintained by an organization incorporated on July 2, 1974.” That organization would be the PGA Tour Inc.
Deferred compensation is a way to set aside income and avoid taxes until the money is withdrawn. Some executives in recent years withdrew their money from deferred-compensation accounts just before their companies filed for bankruptcy, sparking a sharp examination of the practice by tax writers, some of whom consider deferred compensation a tax dodge.
Fred Funk, 48, one of the oldest golfers on the PGA tour, said the PGA retirement plan is “supposedly the best in corporate America.” He told the Journal, “They have a provision in there that if you're inactive in the tour for two years and you attain 52 years of age, you can start getting your payments...a lump sum or take withdrawals over 20, 30 years." Two hundred of the PGA Tour's 500 pros do not get pensions.
The PGA Tour's Chief Financial Officer Ron Price said that the limits on deferred compensation were intended for wealthy executives. He noted that the PGA Tour is a nonprofit organization and PGA golfers are independent contractors. Without the exemption, the new rules would have created “administrative chaos,” Price said.
The Journal noted that many influential lawmakers played with the pros at the PGA Tour's Booz-Allen Classic at Avenel Country Club in Maryland as the bill made its way through Congress in June.
The bill is called the American Jobs Creation Act of 2004. “I don't know what any of these special breaks have to do with American manufacturing jobs," said U.S. Rep. Charles Rangel of New York, the top Democrat on the House Ways and Means Committee. "But I do know one thing - pro golfers and sports-franchise holders won the Washington lobby game, and the American taxpayers have lost."
The PGA pension plan is tied to performance. Golfweek magazine reported in 2001 that a 26-year-old player who began his career that year, plays 17 seasons without winning a tournament, and ranks No. 75 would get a retirement nest egg of nearly $43 million.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.