Newswise — LEXINGTON, Ky. (March 2, 2016) – Should college athletes receive a $65,000 scholarship or be paid $100,000? The latter may sound like the better idea out of the two, but John R. Thelin, University of Kentucky College of Education professor, breaks down the math that proves otherwise.
In a Money.com op-ed published on March 1, titled "Here’s Why We Shouldn’t Pay College Athletes," Thelin examines what would happen if a college player was paid $100,000.
He wrote that while a $100,000 salary is impressive for an 18-year-old high school recruit, it's also subject to federal and state income taxes. And tuition and college expenses would not be deductible because the income level surpasses the IRS eligibility limit.
Using Kentucky for the model, Thelin wrote that a "student-athlete paid a salary would owe $23,800 in federal income tax and $6,700 in state taxes, a total of $30,500. In cities that levy an employee payroll tax, the salaried student’s taxes go up about $2,400 per year. Income taxes then are $32,900."
And Thelin doesn't forget at least $2,000 in other taxes the player would have to pay as an employee, such as Social Security, for a total of $34,900.
"This leaves the college player with $65,100," he wrote. "Since college bills come to $65,000, the player has $100 left."
But how do student-athletes receiving scholarships fare in comparison? With no local payroll tax because the player isn't an employee, the student gets a $200 refund in federal taxes and pays $820 in state taxes, for a total tax bill of $620. This means $64,380 of the $65,000 scholarship can go toward paying academic expenses of $65,000, Thelin wrote.
"What’s clear is that paying salaries for college players is a taxing situation," he wrote.
Read more about how salaries compare to scholarships for student purchasing power, and how both compare to what players in the professional developmental league earn at http://time.com/money/4241077/why-we-shouldnt-pay-college-athletes/.
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