Matt Blumenfeld

Four CA GOP State Senators Violate Taxpayer Protection Pledge


Posted by Matt Blumenfeld on Monday, June 10th, 2013, 4:31 PM PERMALINK


Republicans in the California legislature are pretty close to irrelevant. Now that California Democrats have a supermajority of the legislature, they can overcome the state’s two-thirds vote requirement to raise taxes all by themselves and there is nothing that Republicans can do to stop them. The GOP’s top goal in CA should be getting back to over a third of the seats in the legislature so that Democrats cannot raise taxes at will. However, Republicans in Sacramento are doing all they can to show that California Republicans have no purpose and that neither party will look out for taxpayers.

Recently, the California Senate passed a $2.3 billion tax hike in the form of SB 11 – legislation that would extend sun-setting taxes of $8 in smog abatement, $18 for vehicle registrations, $10 on boat registrations, and $0.75 per tire on consumers annually until the year 2024. The last thing the Golden State economy needs is further tax increases. To the dismay of thousands of constituents, four GOP state senators broke their Taxpayer Protection Pledge, a commitment to their constituents to oppose any and all efforts to raise taxes, in voting for SB 11. In fact, as Cal Watchdog pointed out, nobody in the Senate stood up for the heavily-burdened taxpayers of California:

The Senate Republican Caucus’ own analysis identified the bill as “the continuation of billions of dollars of vehicle registration fees and tire taxes for eight years.” Yet not a single Senator, Republican or Democrat, spoke against the bill.

The following senators broke their promise to constituents:

Senate Republican Leader Bob Huff of Brea

Senator Bill Emmerson of Redlands

Senator Jean Fuller of Bakersfield

Senator Mimi Walters of Irvine

Americans for Tax Reform will be monitoring the status of SB 11 as it moves into the Assembly and informing constituents how their representative votes on this tax increase.

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Missouri Gov. Vetoes Tax Cut, Keeping the State at Competitive Disadvantage to Neighboring Kansas


Posted by Matt Blumenfeld on Thursday, June 6th, 2013, 12:44 PM PERMALINK


Missouri Governor Jay Nixon vetoed a major tax reform measure today that would have seen individual and corporate income tax rates reduced over the next several years. It was the first time in roughly 90 years that comprehensive tax reform had a real chance of being enacted in the Show Me State. If HB 253 had been signed by Gov. Nixon, the legislation would have saved families and businesses $700 million when fully phased in. Now Missouri could see residents and businesses cross the state line into economically competitive Kansas, which already enjoys lower tax rates, and where Gov. Sam Brownback promises to take the state income tax rate to zero.

If Governor Nixon was truly concerned about competing with Kansas’s better business climate and lower taxes, then signing HB 253 into law would have been a good first step. Instead, the Democrat Governor has seen fit to re-enforce the image that Missouri would rather act like Illinois when it comes to taxes than Kansas or Texas.

While HB 253 may not have been perfect, it was a good start to enacting comprehensive tax reform in the Show Me State. It is now up to the Missouri State Legislature to override Gov. Nixon’s veto, or start over when the legislature reconvenes. With Kansas and other regional neighbors committed to reducing taxes for their residents and employers, Missouri could end up losing more businesses and pro-economic growth opportunities and join Illinois as one of the least economically sound states in the country. 

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ATR Opposes HB 3536


Posted by Matt Blumenfeld on Tuesday, May 28th, 2013, 12:33 PM PERMALINK


HB 3536 would impose unnecessary tax hike in the Lone Star State.

ATR president Grover Norquist sent the following letter to Texas legislators in opposition to HB 3536, legislation now pending before Gov. Perry that would impose a tax increase on tobacco products sold by companies that did not sign onto the Tobacco master settlement:

 

6 April 2013

Texas House of Representatives

P.O. Box 2910

Austin, Texas 78768-2910

 

Dear Representatives,

I write today in opposition to House Bill 3536, which would impose new taxes on tobacco products from companies that did not sign the 46-state Master Settlement Agreement. As this bill stands, it would constitute a violation of the Taxpayer Protection Pledge, a written commitment that 55 Texas legislators made to their constituents to oppose any and all efforts to raise taxes.

A tax hike of any kind in the midst of current economic conditions is a bad idea. But an excise tax increase is particularly misguided, especially when Texas’s neighbors impose lower rates. Consumers would see the prices sky-rocket as manufacturers would be taxed at an even higher rate during production of each package.

As it is currently written, HB 3536 constitutes a tax increase and Pledge violation. However, this legislation could be amended in a way that would make it compliant with the Taxpayer Protection Pledge. If this legislation were amended to include offsetting tax relief that made the package as a whole revenue neutral, ATR would not consider it a violation of the Taxpayer Protection Pledge. 

If you have any questions on this matter, please contact Patrick Gleason, Director of State Affairs, at (202)-785-0266 or pgleason@atr.org

Onward,

Grover G. Norquist

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Top 50 Highest Paid Athletes for 2013 - After Taxes


Posted by Matt Blumenfeld on Tuesday, May 28th, 2013, 12:04 PM PERMALINK


Recently, Sports Illustrated published their “Fortunate 50” in which they examined the highest paid athletes in the U.S. based on salary, winnings, bonuses and endorsements. In order to account for salary, winnings and endorsement deals, Sports Illustrated consulted “players’ associations, tour records, online databases, agents and media reports. The endorsement estimates come from a stable of marketing executives, agents and other experts, including Burns Entertainment & Sports Marketing.”

While Sports Illustrated lets the general public know who the top 50 highest paid athletes are for 2013, they did not account for the income tax liabilities or after-tax earnings of these athletes. As ATR has pointed out over the past several months, $20 million dollars earned in one state may not be the same as $20 million earned in another and can result in lists, such as the “Fortunate 50”, telling only half the story.

When tax burdens and liabilities are factored into the “Fortunate 50”, athletes move up and down in the rankings. The difference in state and local income tax rates proved to be a determining factor for an athlete’s place on the list. For example:

  • NFL’s Matt Schaub – Houston Texans - moves up from 27(Sports Illustrated) to 16 (ATR)
  • MLB’s Miguel Cabrera –Detroit Tigers -  moves up from 36 (Sports Illustrated) to 28 (ATR)
  • MLB’s Zack Greinke –Los Angeles Dodgers -  moves down from 10 (Sports Illustrated) to 15 (ATR)
  • NBA’s Amar’e Stoudemire –New York Knicks - moves down from 24 (Sports Illustrated) to 29 (ATR)
  • NASCAR’s Dale Earnhardt Jr. moves up from 49 (Sports Illustrated) to 44 (ATR)

Tax competition between the states is why many Americans have fled states with high income tax burdens – California, New York, Illinois, and Maryland – for more economically favorable states with lower tax burdens, such as Texas and Florida.

With tax competition between states in mind, the “Fortunate 50” list of highest paid athletes in the U.S. for 2013 needed to be updated to account for after-tax earnings.

 

The chart below highlights the estimated state and local tax burden and liability, as well as the federal income tax liability of each of the highest paid athletes in the U.S. for 2013.

The Top 50 Highest Paid Athletes for 2013 After-Taxes are as follows:

After-Tax

Ranking and Earnings

Athlete

Federal Income Tax Liability

State and Local Income Tax Liability

State and Local Income Tax Rate

Sports Illustrated’s

Ranking

#1

$60,300,000

Floyd Mayweather Jr.

$29,700,000

$0

0%

#1

#2

$37,885,150

LeBron James

$18,659,850

$0

0%

#2

#3

$29,158,000

Drew Brees

$15,774,000

$2,868,000

6%

#3

#4

$27,362,148

Tiger Woods

$13,476,879

$0

0%

#5

#5

$25,158,000

Kobe Bryant

 

$15,460,500

$6,231,050

13.3%

#4

#6

$21,226,536

Phil Mickelson

 

$13,044,240

$5,257,224

13.3%

#6

#7

$20,709,860

Derrick Rose

 

$11,022,990

$1,670,150

5%

#7

#8

$19,334,631

Peyton Manning

 

$10,230,000

$1,435,369

4.63% +$5.75 per month on compensation over $500 in Denver

#8

#9

$19,216,940

Dwayne Wade

$9,465,060

$0

0%

#11

#10

$17,152,000

Felix Hernandez

 

$8,448,000

$0

0%

#14

#11

$17,086,225

Kevin Durant

 

$9,131,100

$1,452,675

5.25%

#12

#12

$16,991,200

Vincent Jackson

 

$8,368,800

$0

0%

#15

#13

$16,270,950

Carl Nicks

$8,014,050

$0

0%

#21

#14

$16,205,068

Alex Rodriguez

 

$9,867,000

$3,727,932

12.468%

#9

#15

$15,583,740

Zach Greinke

 

$9,576,600

$3,859,660

13.3%

#10

#16

$15,262,600

Matt Schaub

$7,517,400

$0

0%

#27

#17

$15,155,360

Cliff Lee

$8,342,400

$1,782,240

7.05%

#17

#18

$14,787,500

Joe Mauer

 

$8,250,000

$1,962,500

7.85%

#20

#19

$14,632,270

Mario Williams

 

$8,299,500

$2,218,230

8.82%

#18

#20

$14,452,500

Prince Fielder

 

$7,755,000

$1,292,500

5.5%

#23

#21

$14,341,916

Johan Santana

 

$8,679,000

$3,279,084

12.468%

#13

#22

$14,275,690

Dirk Nowitzki

 

$7,031,310

$0

0%

#35

#23

$13,908,400

Ryan Howard

 

$7,656,000

$1,635,600

7.05%

#25

#24

$13,899,000

Calvin Johnson

$7,458,000

$1,243,000

5.5%

#29

#25

$13,796,596

Carmelo Anthony

 

$8,349,000

$3,154,404

12.468%

#16

#26

$13,687,532

Derek Jeter

 

$8,283,000

$3,129,468

12.468%

#19

#27

$13,087,680

CC Sabathia

 

$7,920,000

$2,992,320

12.468%

#22

#28

$13,038,000

Miguel Cabrera

 

$6,996,000

$1,166,000

5.5%

#36

#29

$12,787,754

Amar’e Stoudemire

 

$7,738,500

$2,923,746

12.468%

#24

#30

$12,669,000

Justin Verlander

 

$6,798,000

$1,133,000

5.5%

#38

#31

$12,425,150

Chris Bosh

 

$6,119,850

$0

0%

#47

#32

$12,392,397

Mark Teixeira

 

$7,499,250

$2,833,353

12.468%

#28

#33

$12,351,000

Tim Lincecum

 

$7,590,000

$3,059,000

13.3%

#26

#34

$12,115,895

Roy Halladay

 

$6,669,300

$1,424,805

7.05%

#39

#35

$12,028,800

Matt Kemp

 

$7,392,000

$2,979,200

13.3%

#30

#36

$11,930,050

Cole Hamels

 

$6,567,000

$1,402,950

7.05%

#44

#37

$11,779,632

Dwight Howard

 

$7,238,880

$2,917,488

13.3%

#31

#38

$11,778,912

Vernon Wells

 

$7,128,000

$2,693,088

12.468%

#32

#39

$11,588,460

Chris Paul

 

$7,121,400

$2,870,140

13.3%

#33

#40

$11,464,950

Adrian Gonzalez

 

$7,045,500

$2,839,550

13.3%

#34

#41

$11,352,687

Joey Votto

 

$6,352,500

$1,544,813

8.025%

#45

#42

$11,344,000

Pau Gasol

 

$6,963,000

$2,793,000

13.3%

#37

#43

$11,284,000

Alfonso Soriano

 

$6,006,000

$910,000

5%

#50

#44

$10,911,816

Dale Earnhardt Jr.

 

$6,077,467

$1,427,284

7.75%

#49

#45

$10,880,770

Joe Johnson

 

$6,584,490

2,487,740

12.468%

#43

#46

$10,793,700

Matt Cain

 

$6,633,000

$2,673,300

13.3%

#40

#47

$10,780,275

Carl Crawford

 

$6,624,750

$2,669,975

13.3%

#42

#48

$10,735,550

Eli Manning

 

$6,105,000

$1,659,450

8.97%

#48

#49

$10,687,200

Barry Zito

 

$6,626,400

$2,766,400

13.3%

#41

#50

$10,203,000

Albert Pujols

 

$6,270,000

$2,527,000

13.3%

#46

 

* The estimated after-tax earnings and overall tax liabilities used do not reflect the “jock tax” liabilities of each athlete.

Methodology Note: For Illustrative purposes, Americans for Tax Reform used a flat rate of 33 percent for the Federal Income Tax column. This is a good faith estimate of each athlete’s average effective tax rate after accounting for deductions and lower brackets. At the margin, each athlete’s top marginal federal income tax rate is 39.6 percent plus a 3.8 percent Medicare surtax. Team sport athletes are assumed to reside in the state and city in which their team is located. Individual sport athletes (e.g., boxers, NASCAR drivers, etc.) are assumed to reside in their actual residences. This distinction is made to account for the so-called “jock tax”.

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ATR Opposes Texas Legislators' Attempt to Raid the ESF


Posted by Matt Blumenfeld on Wednesday, May 22nd, 2013, 5:10 PM PERMALINK


Grover Norquist, President of Americans for Tax Reform, sent a letter to members of the Texas House of Represen today, urging them to either oppose Senate Joint Resolution 1.The bill would create the mechanism through which the Legislature may spend billions from the state’s “savings account.” The letter reads as follows:

May 22, 2013

Texas Legislature

Texas State Capitol

1100 Congress Ave.

Austin, Texas 78701

 

Dear Members of the Texas Legislature:

When considering Senate Joint Resolution 1 this afternoon, please keep taxpayers mind and reject an unnecessary raid on the rainy day fund. While SJR 1 does not appropriate any money from the Economic Stabilization Fund (ESF) directly, the bill creates the mechanism through which the Legislature may spend billions from the state’s “savings account.” As Americans for Tax Reform (ATR) and over a dozen other state and national groups noted in a coalition letter sent to Texas legislators earlier this month, it’s imperative for the state’s financial health that lawmakers “reject calls to raid the ESF [for ongoing expenses and new programs], and stand firm against ‘busting the cap.’”

Given that Texas is the economic envy of the nation, employers, investors, lawmakers, and government officials across the country pay attention to what happens in Austin. By providing tax relief and taking the fiscally responsible course of not tapping the ESF, Texas legislators can send a clear message to employers and investors across the country that Texas will remain the best place in the U.S. to do business and the Lone Star State will remain the nation’s job-creating capital for the foreseeable future.

With state revenues far above what was expected before the session began, it doesn’t take a policy wonk to realize that it makes no sense drain reserve funds. On behalf of Americans for Tax Reform and our members across Texas, I urge you to do the fiscally responsible thing by rejecting calls to unnecessarily tap the ESF to fund ongoing and new spending. ATR will be following this issue closely and will be educating constituents on how their representatives in the legislature vote on this important matter. If you have any questions, please contact Patrick Gleason, ATR’s director of state affairs, at 202-785-0266, or pgleason@atr.org

Onward,

Grover Norquist

President, Americans for Tax Reform

 For PDF version, click here.

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ATR Opposes New Tax on E-Cigarettes in South Carolina


Posted by Matt Blumenfeld on Tuesday, May 14th, 2013, 5:09 PM PERMALINK


Grover Norquist, President of Americans for Tax Reform, sent a letter to members of the South Carolina House Ways and Means Committee today, urging them to either oppose or amend House Bill 4074. In its current form, the bill would levy a new tax on e-cigarettes and is a violation of the Taxpayer Protection Pledge. The letter reads as follows: 

            Dear Members of the Ways and Means Committee,

On behalf of Americans for Tax Reform (ATR) and our members across South Carolina, I write today in opposition to House Bill 4074, legislation which would impose a new tax on vapor products such as e-cigarettes. After the wave of federal taxes that hit your constituents at the beginning of the year, the last thing that South Carolina taxpayers and the state economy need are more job-killing tax increases at the state level.

It is important to be proactive in separating vapor products from "other tobacco products" such as moist snuff and certainly from traditional cigarettes. This reflects the need for tobacco taxation to reflect relative harm. E-cigarettes should never be taxed at the same rate as cigarettes and moist snuff. Carving vapor products out of the OTP designation will insulate them from possible future tobacco tax hikes. However, the new levy that HB 4074 would impose on vapor products is a tax increase that is ill-advised and that the state does not need.

While changing the tax structure to accommodate a new product is important, it must not come at the net expense of taxpayers. For this bill to be compliant with the Taxpayer Protection Pledge – a written commitment that Gov. Haley and many South Carolina legislators have made to their constituents to oppose any and all efforts to raise taxes – the new tax on vapor products must be stripped, or offset with a corresponding tax cut elsewhere. A vote for HB 4074 in its current form will be rated as a vote for higher taxes.

ATR will be following this issue closely and will be educating South Carolina taxpayers on how their representatives in Columbia vote on this important matter.

 

To view a PDF copy of the letter, click here.

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ATR Opposes Transportation Tax Hike in South Carolina


Posted by Matt Blumenfeld on Tuesday, May 14th, 2013, 11:36 AM PERMALINK


ATR President Grover Norquist sent the following letter to Senators in South Carolina in opposition to HB 3412, legislation being considered by the General Assembly. The proposal would raise the gas tax, and contains a number of other provisions which violate the Taxpayer Protection Pledge. The letter reads as follows: 

Dear Members of the South Carolina Senate,

On behalf of Americans for Tax Reform (ATR) and our members across South Carolina, I write today in opposition to HB 3412, legislation that would raise taxes on South Carolinians in a number of ways. HB 3412 redirects revenues obtained through the sale or leasing of vehicles from the General Fund to the State Infrastructure Bank. However, in addition to this, the bill also raises taxes and fees on fuel, cars, trucks, commercial vehicles, and contains several other problematic provisions.

HB 3412 contains numerous provisions that ATR rates as a tax increase and a violation of the Taxpayer Protection Pledge. The indexing of the gas tax to inflation, which this bill would do, would result in higher gasoline taxes and is a clear tax increase. Furthermore, HB 3412 contains numerous “fee increases” that are really tax increases in disguise. These include “fee increases” on personal vehicles, trucks, and a special tax for hybrid vehicles. This legislation also raises “fees” on drivers’ licenses and creates a road use fee for commercial motor vehicles (with a higher tax being placed on vehicles from out of state). These misguided measures will serve to reduce disposable income for families, diminish job-creating capacity of employers, and will discourage commerce in South Carolina.

On the heels of the federal tax hikes that hit your constituents at the  beginning of this year, the last thing South Carolina taxpayers and the  state economy need is to be hit with another round of tax increases. As such, I urge you to oppose HB 3412, which will increase the tax burden on hardworking individuals, families, and employers in the Palmetto State. A vote for HB 3412 is a vote for higher taxes and a violation of the Taxpayer Protection Pledge, an important commitment that 32 South Carolina legislators have made to their constituents. ATR will continue to follow this issue and will be educating South Carolina taxpayers as to how their representatives in the legislature vote on this important matter.

To view a PDF copy of the letter, click here. 

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Pacquiao Takes Fight in Macau, U.S. Federal Income Tax Rate Proves Too High


Posted by Matt Blumenfeld on Tuesday, May 7th, 2013, 11:01 AM PERMALINK


As reported by Yahoo! Sports, boxing superstar Manny Pacquiao’s next fight will take place on November 24; however, for the first time since 2006, the fight will take place outside of the U.S. The official destination of this multimillion dollar sporting event is The Venetian in Macau, China.

As ATR reported in February, the possibility of Pacquiao’s next fight not taking place on U.S. soil due to a punitive federal income tax rate of 39.6 percent was greater than most would suspect.

As boxing promoter Bob Arum told Yahoo! Sports in February, “Manny can go back to Las Vegas and make $25 million, but how much of it will he end up with – $15 million?"

manny pacquiao training

Clearly, the answer is less than what he stands to earn after taxes in Macau.

By holding his next fight in Macau, Pacquiao would only be responsible for a top marginal income tax rate of 12 percent - that’s a whopping 27.6 percent less than the U.S. top marginal federal income tax rate.

As ATR wrote in February:

Since Pacquiao is not a U.S. citizen or permanent resident, he can keep a larger percentage of his fight earnings by taking fights outside of the U.S. The other options Pacquiao and his management team have considered are Macau and Singapore: both casino and gaming markets comparable to Las Vegas and ideal to host a grand boxing event.

If Pacquiao were to earn a hypothetical $20 million for this upcoming fight in Macau, his after tax earnings would be $17.6 million – as opposed to the $12.1 million he would earn for the same proposed scenario in the U.S.

The loss of major athletic and sporting events will have economic repercussions on the American economy specifically tourism.

Fewer boxing matches per year would mean fewer vendors, a decrease in tourism, and less money being spent in host cities. Hosting a major sporting event has proven to create jobs and insert economic life within the city. The federal government needs to follow the examples being set by GOP governors seeking to reduce their respective state’s income tax burden or risk losing investments across every industry.

Pacquiao’s decision to fight in Macau will establish a trend among other non-resident boxers – or any athlete that is a non-resident of the U.S. for that matter - seeking to earn more money during their relatively short professional careers.

Simply put, tax rates matter to everyone regardless of earnings. In Pacquiao’s case, his chief advisor, Michael Koncz said it best, “…the 39.6 percent tax rate Pacquiao would face if he were to fight again in the U.S. makes a fall bout in Las Vegas "a no go."

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17 Texas Legislators Violate Pledge


Posted by Matt Blumenfeld on Tuesday, May 7th, 2013, 10:30 AM PERMALINK


Yesterday, the Texas House of Representatives voted on HB 3536, a bill that would impose a new tax of 2.75 cents per cigarette or per nine-hundredth (0.09) an ounce of tobacco product sold by companies that did not sign the 1998 Master Settlement Agreement. As the bill was written, HB 3536 constitutes a tax increase and a clear violation of the Taxpayer Protection Pledge. This tax increase was approved by the Texas House yesterday by a vote 85-53.

As Empower Texans has already noted, in voting for HB 3536 yesterday, 17 members of the Texas House violated the pledge they made to their constituents to oppose any and all efforts to raise taxes. Those representatives who broke their important commitment to their constituents are as follows:

Rep. Bill Callegari

Rep. Myra Crownover

Rep. Sarah Davis

Rep. Larry Gonzales

Rep. Patricia Harless

Rep. Harvey Hilderbran

Rep. Dan Huberty

Rep. Kyle Kacal

Rep. Jim Keffer

Rep. Lyle Larson

Rep. George Lavender

Rep. Geanie Morrison

Rep. Four Price

Rep. Debbie Riddle

Rep. Ralph Sheffield

Rep. Phil Stephenson

Rep. John Zerwas

Had these legislators remained true to their pledge, HB 3536 would not have passed. Americans for Tax Reform applauds the 32 legislators that stood firm to their word and voted against this tobacco tax increase. ATR will be educating Texas taxpayers on how their representatives in Austin vote on this important matter. 

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Sacramento Mayor to Use Taxpayer Funds in Rushed Arena Proposal


Posted by Matt Blumenfeld on Monday, April 15th, 2013, 1:48 PM PERMALINK


Sacramento Mayor Kevin Johnson has fallen out of touch with the economic interests and responsibilities of taxpayers and current NBA players. The impending relocation of the Sacramento Kings to Seattle led to the former professional basketball player to assist in the drafting of a new arena proposal in hopes of keeping the team in within the Golden State. Unfortunately, the proposal calls for the city to contribute $258 million in taxpayer dollars that they essentially do not have. Not only does Sacramento not have the money, but taxpayers voted against a similar proposal just a few short years ago.

Mayor Johnson is desperately trying to keep the Kings in California despite the fact that the city’s taxpayers don’t want to spend public funds to finance a vacuum project and the players are susceptible to the highest tax rates in the U.S. And that’s all before paying “jock taxes” on income earned for away-games and other various expenses.

As a former three time NBA All-Star, one would think Mayor Johnson would better understand the tax burden faced by NBA players and other professional athletes. That doesn’t appear to be the case.

Professional athletes – of all sports – not only pay the top marginal federal and state income tax rates, but are also now responsible for paying a “jock tax” on their earnings per away games. The “jock tax” burden – put into practice after the 1991 NBA season by the state of California – did not impact Johnson’s tax liability or economic earnings for his first five seasons in the league. As a member of the Cleveland Cavaliers in 1987 and the Phoenix Suns from 1988 to 1998 and 2000, his top marginal state income tax rate responsibilities ranged from 6.9 percent in Ohio and 8 percent to 5.1 percent in Arizona according to these respective states’ Department of Revenue. 

On the federal side, Johnson’s federal income tax burden as an NBA player was 28 percent from 1987 to 1989, 31 percent from 1990 to 1992, and 39.6 percent from 1993 until his final retirement in 2000. It can be assumed since Johnson was a multiple NBA All-Star and one of the premier guards in the league that his earnings fell within the top marginal brackets across the board. With that in mind, why would a former player want to prevent a current player from obtaining their greatest earning potential throughout a relatively short career?

As it currently stands, Sacramento Kings players have a combined top marginal income tax rate of 56.7 percent: a 39.6 percent federal income tax rate, a 13.3 percent state income tax, and a  3.8 percent Medicare tax – all before paying the “jock tax”, which changes from year to year based on the team’s travel schedule, on the remainder of their salary. A move to Seattle would see the combined top marginal income tax rate reduced to 43.4 percent due to the Evergreen State’s lack of an income tax. For example, DeMarcus Cousins, the Kings’ leading scorer, would see his $2.2 million tax liability decrease to $1.7 million before paying the jock tax. Simply by relocating the team to Washington, Cousins would see his after-tax pay increase by $515,733.

For the 2012-2013 season, DeMarcus Cousins’ “jock tax” liability for the 41 away games is highlighted in the chart below.  Since he is in the middle of his contract, the estimated $47,326.83 per game is based only on his salary for this season. Signing bonuses, endorsements, and other viable sources of income would be taxed in his home state.

States/Countries Games Played

Estimated “Jock Tax” Amount per Game

Arizona

$4,013.32

California

$29,247.98

Colorado

$4,382.46

District of Columbia

$4,022.78

Florida

$0

Georgia

$2,839.61

Illinois

$2,366.34

Indiana

$1,609.11

Louisiana

$5,679.22

Massachusetts

$2,484.66

Michigan

$2,011.39

Minnesota

$3,336.54

New York

$6,294.47

North Carolina

$3,312.88

Ohio

$1,944.66

Oklahoma

$4,969.32

Oregon

$8,518.83

Pennsylvania

$1,452.93

Tennessee

$0

Texas

$0

Toronto, Ontario, Canada

$0

Utah

$4,732.68

Wisconsin

$3,076.24

For game played in Canada, the estimated $9,489.03 he would pay will be counted as a tax credit by the U.S. federal government. Thus cancelling out the money he would owe for that game. The sum of each “jock tax” liability was calculated by multiplying the estimated $47,236.83 per game by the number of away games per state. The total number was then multiplied by the tax rate of the tax bracket of said state.

If the approval of the latest arena deal by the Sacramento City Council is upheld and approved by the NBA, Mr. Cousins can continue to expect home and away game tax liabilities of this magnitude.

With the thought of losing the Sacramento-based franchise to Seattle, Mayor Johnson and company pushed through a rushed $448 million arena proposal with the aim to counteract the possible team relocation to Seattle by the new controlling-interest owners Chris Hansen and Steve Ballmer. As reported by the Sacramento Bee, “the city would contribute $258 million, most of it by borrowing against future revenue generated by downtown parking meters and garages.” Sacramento taxpayers, when asked to vote on a similar proposal a few years ago, resoundingly voted against it. Clearly, elected officials have continued to not listen to their constituents.

Conversely, the proposed $490 million Seattle arena plans to use $200 million in public funds to finance the project with the public investment being paid back with admissions taxes from the arena and Hansen’s private funds if necessary. Both proposals misuse taxpayer funds – similar to the controversy involving NFL stadiums – to build arenas for privately owned sports franchises, and should’ve been financed through other, non-taxpayer avenues. But at least Hansen is responsible for replacing the public funds.

With two arena proposals now on the table, the final decision ultimately comes down to the NBA when the powers-that-be meet April 19 to decide the fate of the Kings franchise. Players and owners should be making their voices heard, particularly in favor of moving to Seattle. The team would be revitalized with a new team name, the Supersonics; a brand-new fan base that has been waiting for a professional basketball team to return since the original Supersonics became the Oklahoma City Thunder; owners willing to invest to bring in more talent and sponsors; and more economic earning potential for players, coaches, owners, and other members of the franchise.

A move to Seattle simply means that Kings – hopefully soon to be Supersonics – players will be able to keep their earnings for the 41 home games during the regular season before paying “jock tax” for all their away games. More disposable income would further allow players to re-invest in their new host city. Further improving the economy of Seattle and the state of Washington. Seattle just isn’t the same without the Supersonics. Mayor Johnson should recognize this since the Kings only came to Sacramento two years before he entered the league. Besides, who doesn’t miss seeing the green and yellow uniforms flash across the TV screen throughout the season?

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