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(TaxProf)   NBA benchies lose money when they play the Memphis Grizzlies due to the Tennessee flat rate jock tax   (taxprof.typepad.com) divider line 24
    More: Strange, Memphis Grizzlies, NBA, Memphis, National Basketball Players Association, Jeff Saturday, LeBron James, athlete of the year  
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1816 clicks; posted to Sports » on 14 Dec 2013 at 7:17 PM (44 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



24 Comments   (+0 »)
   
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2013-12-14 05:32:30 PM  
Wow, that's a bullshiat way to tax someone.
 
2013-12-14 07:18:48 PM  

twistedmetal: Wow, that's a bullshiat way to tax someone.


Wait until the New York legislature passes the Robinson Cano tax next month, in which an athlete making his first return to New York after departing a New York team will be assessed a noise-abatement levy by the state in anticipation of the booing he receives.

The tax will have to be amended after the state sends a $50,000 bill to Lou Piniella for appearing at Old Timer's Day.
 
2013-12-14 07:47:48 PM  
Yeah, that's pretty absurd.

Tax based on income made in that day, but don't tax a flat fee. Though I really don't feel sorry for any professional athlete who makes a few hundred grand a year to ride on the bench... if I were a guy like Russell Wilson, who is drastically underpaid for his ability thanks to the absurdities of the NFL's recent CBA (rookie contracts WERE out of control, but now a low-round pick who turns into a superstar very quickly is much closer to a "slave" than Warren Sapp ever was), I'd be pretty pissed.
 
2013-12-14 07:48:50 PM  
They don't have to show up.
 
2013-12-14 08:35:34 PM  

"... Though I really don't feel sorry for any professional athlete who makes a few hundred grand a year to ride on the bench..."


I never understand why this is said about any person/actor/athlete who makes money, even if they're injured or under other circumstances. These people signed a contract to earn whatever they earn, playing or not. If anyone can make money fairly, then good for them. They get paid even if they ride the pine, that's not their fault. And just because someone has money doesn't mean unfair treatment is deserved.

 
2013-12-14 08:44:40 PM  
What we need is some sort of organization these benchwarmers could join to help defray these types of costs.
 
2013-12-14 08:48:50 PM  

skinink: These people signed a contract to earn whatever they earn, playing or not.


People pay to see the performers or performances. People don't pay to see the practices, the workouts, and the other stuff. Hence, I think a bit differently of the grips and backup actors than those on the stage at any given moment, even if said performers aren't in the spotlight per se.

skinink: And just because someone has money doesn't mean unfair treatment is deserved.


Well, I think it is fair that wealthy individuals are taxed at a higher rate, or those who work in multiple states for large sums of money have to deal with some rather crappy taxes or fees (perhaps these leagues should change their contract structures to try to go through some loopholes in state laws). Again, I don't think it's fair that LeBron James pays as much as LaMichael James for playing in Tennessee. But I also don't think it's fair that a millionaire in a Porsche and a college student in a Geo Metro living off of loans a crappy job would, presumably, pay the same fine for the same speeding ticket.
 
2013-12-14 08:54:27 PM  
Maybe they need to move to a little cabaret in a South Texas border town...
 
2013-12-14 09:16:32 PM  
NBA players don't lose money with this tax. Minimum NBA salary for someone with 0 years experience is $490,180. That number divided by 82 works out to be $5977. Now, a $2500 tax bill on that game is going to eat into it heavily...but they're not losing money by playing there.

NHL minimums are higher than that. Don't know what they're basing their math on to claim such a thing, but it isn't true.
 
2013-12-14 09:23:49 PM  

IAmRight: NBA players don't lose money with this tax. Minimum NBA salary for someone with 0 years experience is $490,180. That number divided by 82 works out to be $5977. Now, a $2500 tax bill on that game is going to eat into it heavily...but they're not losing money by playing there.

NHL minimums are higher than that. Don't know what they're basing their math on to claim such a thing, but it isn't true.


Right, because that'd be the only tax on that money.....
 
2013-12-14 09:31:02 PM  

Dawg47: Right, because that'd be the only tax on that money.....


They're still not losing money.

The way they worked it out is by taking the minimum possible salary (BTW, 1 year of experience takes the minimum salary from $490K to $788K) then dividing it by 365.

Well, okay. I guess we can pretend they're being paid for every day. In that case, they're getting a hell of a lot of free paid vacation.

It's still a silly amount of tax and IMO everything should just be based on where the player/worker is based; having this crap with trying to send tax bills based on who was present for each team that night is entirely too much extra BS to be worth it...but people need to stop being drama queens about it and acting like it's a huge issue. If it's that big a deal, people wouldn't be making that trip.
 
2013-12-14 09:32:59 PM  
How long do you think Memphis keeps that team? They could use a team in Seattle. Gobs and Gobs of software money there.
 
2013-12-14 09:40:13 PM  

IAmRight: IMO everything should just be based on where the player/worker is based


The reason we don't do that is because then every player would magically be "based" out of Florida, despite never actually doing business in the state
 
2013-12-14 09:54:06 PM  

skinink: "... Though I really don't feel sorry for any professional athlete who makes a few hundred grand a year to ride on the bench..."
I never understand why this is said about any person/actor/athlete who makes money, even if they're injured or under other circumstances. These people signed a contract to earn whatever they earn, playing or not. If anyone can make money fairly, then good for them. They get paid even if they ride the pine, that's not their fault. And just because someone has money doesn't mean unfair treatment is deserved.


Add on top that even the benchiest of the bench in the NBA and are most likely the top 500 of the best basketball players in the world, and that they work hard to maintain that skill level or else they get send to the D-league or become a free agent. And its not like these guys dont want to play, they just arent given the opportunity to. Bench player would rather play then to sit even if it mean they get paid the same.
 
2013-12-14 10:58:58 PM  

Lost Thought 00: The reason we don't do that is because then every player would magically be "based" out of Florida, despite never actually doing business in the state


I'm referring to what team they play for. Or just come up with something within the league to figure it all out and even things out if they think it's too much of an issue for competitive balance.

/and most players do choose FL (although there are several other states with no state income tax)
 
2013-12-15 01:29:53 AM  

IlGreven: Maybe they need to move to a little cabaret in a South Texas border town...

...sat a boy and his guitar, and people came from all around
 
2013-12-15 02:44:12 AM  

The Smails Kid: IlGreven: Maybe they need to move to a little cabaret in a South Texas border town......sat a boy and his guitar, and people came from all around


To see the little dark haired boy who paid the Tennessee flat rate tax.
 
2013-12-15 09:48:37 AM  

Lost Thought 00: The reason we don't do that is because then every player would magically be "based" out of Florida, despite never actually doing business in the state

 
Kinda like how corporations are "based" in Delaware.  But the author does make a point that, legally speaking, this does delve into the territory of the Commerce Clause.  I'm sure if some lawyer brings it far enough, you could get the flat tax repealed.  Maybe make it some sort of formula, like (x)% of 1/82 of your yearly base salary for hockey & basketball.

Either way, I'm surprised we haven't heard more about these sorts of taxes before.
 
2013-12-15 10:23:53 AM  
It wouldn't surprise me if taxes like this push more teams and other things out of Tennessee. At work we sell computer parts and they sent a guy to our office in Atlanta to audit our sales tax payments to them (we used to have an office there, so we are permanently considered to have a presence there). We passed the audit but it was a waste of time for us.

I know companies that moved their data center out of state because they charge sales tax on support renewals and it is cheaper to move than to pay it. It gets their data out of earthquake susceptible Memphis as well, so it was a double bonus.
 
2013-12-15 11:16:28 AM  

IAmRight: Dawg47: Right, because that'd be the only tax on that money.....

They're still not losing money.

The way they worked it out is by taking the minimum possible salary (BTW, 1 year of experience takes the minimum salary from $490K to $788K) then dividing it by 365.

Well, okay. I guess we can pretend they're being paid for every day. In that case, they're getting a hell of a lot of free paid vacation.

It's still a silly amount of tax and IMO everything should just be based on where the player/worker is based; having this crap with trying to send tax bills based on who was present for each team that night is entirely too much extra BS to be worth it...but people need to stop being drama queens about it and acting like it's a huge issue. If it's that big a deal, people wouldn't be making that trip.


It's never be based on where the athlete is based, because then they'd all be based in a state with no income tax.

In any case, it's not just professional athletes who get taxed based on where they work. Technically, it's everyone. It's just that most people don't make enough to make it worthwhile for a state, while athletes do. For example, I used to go on a one-week training trip to Atlanta every year at my old job. Technically I should file a Georgia return, but in reality I wasn't going to because the tax on one week of a fairly average salary is not worth my time or the state's. But 1/82 of LeBron James' salary will move the needle. Now multiply that by all the states where he plays.

tl;dr: Athlete tax accounting is crazy complex due to the state issues. Nexus, biatch.
 
2013-12-15 11:28:42 AM  

IAmRight: NBA players don't lose money with this tax. Minimum NBA salary for someone with 0 years experience is $490,180. That number divided by 82 works out to be $5977. Now, a $2500 tax bill on that game is going to eat into it heavily...but they're not losing money by playing there.

NHL minimums are higher than that. Don't know what they're basing their math on to claim such a thing, but it isn't true.


Also, throw in the Federal tax on that same game check and if they're not losing money, they're coming damn close.
 
2013-12-15 11:24:52 PM  

FreakinB: Also, throw in the Federal tax on that same game check and if they're not losing money, they're coming damn close.


I don't know why people think federal income tax is that high. It doesn't even approach 50% no matter how much you make. It's not close.

FreakinB: Technically, it's everyone. It's just that most people don't make enough to make it worthwhile for a state, while athletes do. For example, I used to go on a one-week training trip to Atlanta every year at my old job. Technically I should file a Georgia return, but in reality I wasn't going to because the tax on one week of a fairly average salary is not worth my time or the state's. But 1/82 of LeBron James' salary will move the needle. Now multiply that by all the states where he plays.


The fact that everyone does it doesn't make it less stupid.

But as long as lawyers/accountants write the laws, they're going to make them as convoluted as possible so they can all stay employed.
 
2013-12-15 11:44:48 PM  

IAmRight: FreakinB: Also, throw in the Federal tax on that same game check and if they're not losing money, they're coming damn close.

I don't know why people think federal income tax is that high. It doesn't even approach 50% no matter how much you make. It's not close.


The max bracket for 2013 starts at $400,000, which is less than the minimum salary you established earlier. So for simplicity's sake (it won't be THAT far off), let'shiat that full game check at the max 39.6% Federal rate. I'm coming up with $2,367. Add the $2,500 TN jock tax and you're at $4,867 on a $5,977 game check. That's an 81.4% tax rate. I'm no tea partier, but that's insane.

This is even before you add any other taxes (state tax from the player's state of residency, whatever else), to the extent they apply.
 
2013-12-15 11:59:19 PM  

FreakinB: IAmRight: FreakinB: Also, throw in the Federal tax on that same game check and if they're not losing money, they're coming damn close.

I don't know why people think federal income tax is that high. It doesn't even approach 50% no matter how much you make. It's not close.

The max bracket for 2013 starts at $400,000, which is less than the minimum salary you established earlier. So for simplicity's sake (it won't be THAT far off), let'shiat that full game check at the max 39.6% Federal rate. I'm coming up with $2,367. Add the $2,500 TN jock tax and you're at $4,867 on a $5,977 game check. That's an 81.4% tax rate. I'm no tea partier, but that's insane.

This is even before you add any other taxes (state tax from the player's state of residency, whatever else), to the extent they apply.


Also, I realize this is a really back-of-the-envelope calculation that leaves out some important factors (deductions, etc.). But even on that basis, nobody's tax rate should be that high on any portion of their salary in the US.

/Full disclosure: I'm a tax accountant
//I don't work on individuals though
 
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