Brady Wilson

Soda Tax Pops Up Around the World

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Posted by Brady Wilson on Wednesday, August 3rd, 2016, 5:11 PM PERMALINK

Philadelphia made news recently when it became the second city in the U.S. to impose a tax on soda.  Such taxes are not just confined to the U.S. either: France, the UK, and Mexico all have a version of the tax.  South Africa and the Philippines are mulling similar taxes.  

The soda tax is just another example of politicians reaching into the wallets of working people.  Governments are targeting low income families who are most likely to consume sugary drinks.  The targets of the tax are the least able to afford the government’s greedy tax.  

Why do politicians push soda taxes? They want the money. Some politicians claim that adding a soda tax will increase healthy behavior, but there is little to no evidence.  In fact, there have been some studies that suggest consumers will take in more calories from other drinks than they would from soda.  Yet, even more ridiculous is that after the tax, Mexicans are drinking more sugary drinks than before.   

Although the soda tax has struggled to achieve its aims, it has had negative consequences.  First, the tax is regressive, hitting low income families the hardest.  In theory, the soda tax should decrease consumption, but what about the people who still continue to drink the beverages?  This isn’t just a hypothetical either.  In Mexico, low income families were the least likely to decrease their soda consumption as a result of the tax.  Those who can afford the tax the least are the ones forced to pay it.

Even the avowed socialist Bernie Sanders is opposed to the soda tax. “The mechanism here is fairly regressive. And that is, it will be increasing taxes on low income and working people,” he said.

Even more damning for the tax is the reality that the homes with an obese head of household were the group least affected by the increase in price.  The tax is meant to lower the consumption of sugary drinks, but it has failed to affect the group the tax targets.  Instead, the tax eats up the family’s resources meaning that less money can be spent on other groceries like fruits or vegetables. 

Furthermore, states are simply ignoring the clear evidence that does exist which is that taxes like this do not work.  In Denmark, the tax on foods and drinks high in fat was repealed within 15 months.  The state saw how the tax failed to help the people’s health and wisely scrapped the useless tax. Despite evidence showing the ineffectiveness of the tax, countries around the world are scrambling to add it. 

Countries typically point to the tax as a measure to combat rising obesity rates, yet recent attempts point in a new direction.  Instead of masking the tax in as a health policy, the Philadelphia tax was propped up as a measure to support education including prekindergarten, community schools, and rec centers.  Even under the guise of education, nearly 20% of the revenue from the soda tax will not be spent on these measures. This new path just shows what we’ve known all along, the soda tax is just another opportunity to steal revenue from the people.

 

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IRS to Team USA Medalists: Pay Up!

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Posted by Brady Wilson on Wednesday, August 3rd, 2016, 2:38 PM PERMALINK

American athletes still face taxation on Olympic medal rewards

The 554-member Team USA has descended upon Rio de Janeiro, Brazil to compete in the Olympic Games. As a reward for winning Gold, Silver, or Bronze, U.S. athletes receive a monetary reward. But the IRS still wants its share.   

The U.S. Olympic Committee recognizes its medalists with $25,000 for gold, $15,000 for silver, and $10,000 for bronze. But the IRS considers these amounts to be regular income, subject to taxation.

A gold medalist from Team USA could end up facing a tax bill of $9,900 per gold medal, $5,940 per silver medal, and $3,960 per bronze medal.

To be clear, these are the maximum possible tax amounts, and vary widely based on an individual’s tax circumstances and available deductions. Still, the athletes must reckon their medal winnings with the IRS code, a headache they can do without.

                                                Maximum Prize Tax             

Gold                                      $9,900                  

Silver                                    $5,940                  

Bronze                                  $3,960           

Americans for Tax Reform brought the issue to the public’s attention during the 2012 Olympics. Sen. Marco Rubio (R-Fla.) took the lead and immediately introduced The Olympic Tax Elimination Act. The bill called for IRS code to be changed so that the gross income of U.S. medal winners “shall not include the value of any prize or award won by the taxpayer in athletic competition in the Olympic Games.” 2012 GOP presidential nominee Mitt Romney also called for an end to the tax.

In March 2016, Sen. John Thune (R-S.D.) introduced a bill (S. 2650) to stop the IRS from taxing Team USA medalists. The bill passed the Senate by unanimous consent on July 12.

In the House, Congressman Blake Farenthold (R-Texas) introduced a similar bill called the TEAM Act (H.R. 2628).

Americans who wish to express their support for the House bill can do so through the petition here or sign below:

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Burgers, Fries and Taxes: Kerala Levies a Heavy Tax on Fast Food

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Posted by Brady Wilson on Tuesday, July 26th, 2016, 3:47 PM PERMALINK

Last week, the Indian state of Kerala implemented a tax on fast food that has been called the "fat tax."  The tax is levied at a rate of 14.5%.  While currently limited to one state, the policy sets a precedent that the rest may soon follow especially after seeing the revenue that the fat tax brings Kerala.  

The state is adding the tax for one reason: money.  Kerala is not looking to fight for the health of its citizens, it just sees the chance to squeeze more money from working people.

India claims that it is using the tax to combat obesity, yet the tax falls short of that objective.  The tax only applies to brands such as the major chains McDonald's, Burger King, Domino's, and KFC.  Thus, the tax aims to push citizens away from these businesses and toward local foods which as one cafe owner noted, "A lot of local food is more fatty and unhealthy."  A dietician echoed that thought, “Why just burgers and fries? Indian food is also laden with empty calories, which give no concrete nutrition.” The tax is not truly altering the dietary habits of Indians, it is targeting certain multinationals that the government does not approve of.  

Indian lawmakers pointed to past attempts at the fat tax as their inspiration for the policy.  However, they ignore that the tax was a resounding failure in Denmark, the one country where it was previously implemented.  In short, the Danish tax led to inflation, job loss, and cross-cross border shopping while requiring massive administrative costs to operate.  When the Danish saw the drawbacks coupled with a lack of success at combating obesity, they wisely disbanded the tax in less than a year.

In a study examining the Danish fat tax, the think-tank Institute of Economic Affairs concluded that the fiasco has created lessons for policy-makers considering that tax.  The study explained that the effects on calorie consumption and obesity will be minimal while the tax itself is regressive, inefficient, and unpopular.  Yet three years later, Kerala is ignoring the evidence from Denmark to create a ridiculous tax. 

Right now it is just a small state in southern India, but as other nations see Kerala’s tax, they will see another opportunity to add to their coffers.  Countries are already debating their version of the tax including in Italy while Barbados was forced to quash rumors of a fat tax that arose after Kerala’s new policy. 

Just as other states will copy this ridiculous tax, it begs the question, what else will governments tax?  One Indian newspaper quipped that next will be a skinny tax, or a sick tax, or maybe even a dumb tax to control the behavior of its people.

If the government truly wanted to help its people make a more healthy option, it should have launched an educational campaign to help its citizens make an informed decision.  Instead, the government is using a high tax to remove the ability to choose from its people while stealing money from hardworking citizens.  

 

 

Photo Credit: Zhao

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“Jock Tax” Dunks on Lebron in Game 7

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Posted by Brady Wilson on Friday, June 17th, 2016, 3:43 PM PERMALINK

The Cavaliers will have to give their best effort to complete a historic upset in Game 7, but Lebron will have to pay a little extra thanks to California’s steep “Jock Tax.” The jock tax targets traveling professionals, most notably athletes. Of the 21 states and 8 municipalities that have the tax, California, home to the Golden State Warriors, has the highest version in the country at 13.3%.   

Since the jock tax is calculated by a “duty day” system, the athlete’s income is taxed based on how many working days he spends in the state. NBA players have about 229 days in season, and Lebron will spend at least three of those days in California because of Game 7. Since Lebron brings in $23.2 million in salary, that breaks down to $101,310.04 per duty day X 3 days in California = $303,930.13.  Since the tax is 13.3%: 303,930.13 X .133 = $40,422.70.

That means Lebron will owe up to a whopping $40,422.70 just from the jock tax to the state of California just to play in Game 7.   

Whether he wins or loses, Lebron will see a large portion of his bonus disappear. A win will net each player a $118,063.13 bonus, meaning Lebron is losing 1/3 just to the jock tax. If the Cavs lose, each player on the roster will bring home a $78,231.60 bonus, where James will actually be giving away half of his bonus just to pay in Game 7.  

Throughout the NBA Finals series against Golden State, Lebron alone is set to pay California up to $161,690.80 in jock taxes. 

It is difficult to think of 6’8, 250 lbs James as vulnerable. Sure, $161,000 might not be much to James, but he has no voice in California taxes. As a resident of Ohio, James cannot vote on tax laws in California, nor can he vote for politicians who to represent him. Instead, a tax is being forced on him with no opportunity to object. 

The taxes don’t end with the jock tax either. James still has to pay the IRS at the marginal rate of 39.6 percent, plus FICA and state income taxes.  

James will be the center of attention during Game 7, but the jock tax does not single out superstars. Instead, anyone who travels with the Cavaliers organization for Sunday’s game will have to pay the California jock tax. That means that trainers and equipment managers who are not bringing in the high paying NBA contracts will still have to shell out their earnings to California.

 

Photo Credit: Keith Allison

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“Jock Tax” Hangs Over NBA Finals

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Posted by Brady Wilson on Thursday, June 16th, 2016, 10:46 AM PERMALINK

There is more on the line in Game 6 than just the Larry O’Brien Championship Trophy. If Golden State doesn’t close out the NBA Finals in Cleveland, everyone in the Cavaliers’ organization will have to pay California’s “Jock Tax” for Game 7. While Cleveland abolished the jock tax last fall, California has the highest version of the tax at 13.3%

For two decades, states and municipalities have been levying a “duty days” tax on traveling professionals which has become known as the “jock tax” since it applies most visibly to professional athletes. The tax is calculated by the number of days that an individual spends in the state whether it be for practice, games, or meetings. 

21 states and 8 municipalities have jock taxes. Everyone who travels with a team is forced to pay. That means even benchwarmers who are paid the league minimum are forced to pay the tax. In some instances, these players are losing more money from the tax than they earn in salary. 

While some athletes struggle under the weight of the tax, it has an even larger impact on the people who travel but are not on the roster.  Positions including the trainer and equipment manager are charged the same flat tax simply for being affiliated with a traveling sports team.  Not only are the fees burdensome for staff who are often paid at the national average income, but they are also forced to file taxes in 15 to 20 different states each year. This forces them to seek out accountants since the tax can best be described as “a puzzle that needs to be assembled by a professional.”

The tax conflicts with the very reason for American independence: taxation without representation. Since workers are taxed by places where they only visit for a few nights each year, they cannot vote on the taxes or the representatives who administer them.  The politicians are using the jock tax as a way to easily grab money without upsetting the constituents who have the power to vote them out.

The jock tax has made news recently as a settlement between the National Basketball Players Association and the city of Memphis made the city pay out $2.38 million of the $7.27 million that it collected since its tax began in 2009.  This could be the beginning of the end for the jock tax.

Even while this seems to be a victory against the jock tax, the same professionals who are most hurt by the tax are left out. While the low earners do not have the funds to pay out a large portion of their salary each night, they also cannot afford legal representation to challenge the tax and ensure that they are reimbursed.

Other cities and states should look to the Memphis example and see the irrationality and injustice of levying such a devastating tax on the young men and women who are pursuing their version of the American Dream. 

SEE ALSO: Sign The Petition Urging Congress to Redesignate Gravelly Point Park as Nancy Reagan Memorial Park

Photo Credit: Erick Drost


Lebron and the Cavs are Set to Pay the "Jock Tax" for Game 5

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Posted by Brady Wilson on Monday, June 13th, 2016, 9:57 AM PERMALINK

The Cavaliers are losing more than just a friendly crowd when they travel to Oakland to play the Warriors in Game 5 of the NBA Finals.  While, Cleveland abolished the jock tax last fall, California has the highest version of the tax at 13.3%.  For two decades, states and municipalities have been levying a flat tax ranging in amount from $2,500 to $7,500 per game on traveling professionals which has become known as a “jock tax” since it applies most visibly to professional athletes. 

With 21 states and 8 municipalities having jock taxes, everyone who travels with a team is forced to pay. That means even benchwarmers who are paid the league minimum are forced to pay the tax. In some instances, these players are losing more money from the tax than they earn in salary. 

While some athletes struggle under the weight of the tax, it has an even larger impact on the people who travel but are not on the roster.  Positions including the trainer and equipment manager are charged the same flat tax simply for being affiliated with a traveling sports team.  Not only are the fees burdensome for staff who are often paid at the national average income, but also they are forced to file taxes in 15 to 20 different states each year. This forces them to seek out accountants since the tax can best be described as “a puzzle that needs to be assembled by a professional.”

The tax conflicts with the very reason for American independence: taxation without representation. Since workers are taxed by places where they only visit for a few nights each year, they cannot vote on the taxes or the representatives who administer them.  The politicians are using the jock tax as a way to easily grab money without upsetting the constituents who have the power to vote them out.

The jock tax has made news recently as a settlement between the National Basketball Players Association and the city of Memphis made the city pay out $2.38 million of the $7.27 million that it collected since its tax began in 2009.  This could be a sign of the end for the illogical tax.

Even while this seems to be a victory against the jock tax, the same professionals who are most hurt by the tax are left out.  While the low earners do not have the funds to pay out a large portion of their salary each night, they also cannot afford legal representation to challenge the tax and ensure that they are reimbursed.

Other cities and states should look to Memphis and see the irrationality and injustice of levying such a devastating tax on the young men and women who are pursuing their version of the American Dream. 


 

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