NFLPA Director warns players and agents to get ready for year long lockout

[203Pat]

The NFL is already laying the groundwork for allowing marijuana use. They haven't done it yet because they are keeping it in their back pocket as a bargaining chip for the CBA negotiations. Which to me is such a small stupid concession since the players not in the program are only tested once a year at the same time of year. Just stop a few weeks before the test then smoke all you want afterwards. It's not that hard. Nevertheless the players will take it as a win when the owners give them "legal" marijuana, some magic beans, and a pack of gum.

 

[Ring 6]

What you need to realize is that not all types of income are taxed equally. Mitt Romney paid an effective 14% income tax because he makes his money via long term capital gains.

A pro athlete, however, makes his money via regular salary (wages). So yeah, unless they are cheating on their tax return, it is perfectly reasonable to assume they are paying roughly 33% in federal and state taxes. Actually, the 33% number would be a very low guess since most of their income would be taxed at the highest rates and federal taxes alone would be greater than 33%, not to mention the additional 5% to 10% they'd pay if they lived in MA, NY or CA. Then they also have to pay state taxes to states where they play their road games. All of a sudden, the effective tax rate can creep awfully close to 50%....

Sorry but CPA's are not magicians that can concoct millions of dollars worth of deductions out of thin air for no reason at all.

And to have a deduction you must spend the money.

You and I each make 3,000,000.
You pay 1,000,000 on tax and keep 2,000,000.

I donate 1,000,000 to charity. I pay 666,666 in taxes.
I keep 1,333,333

You paid an effective tax rate of 33%. I paid an effective tax rate of 22%.

My deduction does not leave me with more money because I gave away 1,000,000 in order to save 333,333

 

[Ivan]

It would destroy the sport.

No it wouldn’t, it would simply give the player’s the real leverage they need to do battle with the owners. The owners aren’t going to walk away from their golden goose just because the players were able to actually get a good deal with them.

 

[Ring 6]

No it wouldn’t, it would simply give the player’s the real leverage they need to do battle with the owners. The owners aren’t going to walk away from their golden goose just because the players were able to actually get a good deal with them.

It certainly would. The trans with the mist money would get all of the good players and the teams without money would never win. Fans of 80% of the teams would lose interest, because they gave no chance of winning. A league that isnt competitive will die quickly.

 

[Ivan]

It certainly would. The trans with the mist money would get all of the good players and the teams without money would never win. Fans of 80% of the teams would lose interest, because they gave no chance of winning. A league that isnt competitive will die quickly.

I don’t think trans with mist money will be a factor.

Just my honest opinion.

 

[Ring 6]

I don’t think trans with mist money will be a factor.

Just my honest opinion.

They would get all the best players. How could they not? Why do you think sports leagues ave drafts, limitations on free agency, salary caps etc? It for competitive balance. That’s the whole point.

 

[QuantumMechanic]

What you need to realize is that not all types of income are taxed equally. Mitt Romney paid an effective 14% income tax because he makes his money via long term capital gains.

A pro athlete, however, makes his money via regular salary (wages). So yeah, unless they are cheating on their tax return, it is perfectly reasonable to assume they are paying roughly 33% in federal and state taxes.

Exactly. It's not so much amount of income as character of income (though obviously having lots of money can help to pay for lawyers and accountants to rig up...interesting...schemes if the character of income is amenable to tax shelters).

Someone who makes $10mil a year but all as W-2 wages isn't going to be able to do much of anything to offset those. Almost all the tax shelter stuff you hear about only works to offset passive income, which wages aren't. (Though I suppose you can do stuff like get a tax deduction while laundering money to relatives by means of a sleazy private foundation -- if the IRS doesn't catch you.) The top federal bracket is 37%, which kicks in at $510,000 of taxable income. So to a good approximation all of that salary will be taxed at 37% federally. Then there's the 1.45% Medicare tax (which unlike the SS tax is not capped). And in MA there's the 5.15% income tax. So a total effective rate of over 43%. If the person lives in NYC or LA then their state and local tax on top of the federal taxes will be around 50%.

On the flip side, someone with a $75,000/yr Schedule C sole proprietorship has a bunch of...creative...options open to them (though of course not as much as someone with a $1mil/yr LLC.).

And if you get a lot of your income from a passive activity like real estate, then the floodgates can really open.