How many catches and throws will baseball superstar Bryce Harper make for the federal government and local state governments every year? Given his newly inked deal with the Philadelphia Phillies for $330 million over a record 13 years, if the “Socialist Democrats” get their way, close to 90 percent of his work will be for free!
His contract works out to be worth about $26 million per year – he needs a good tax lawyer. Under the current, what I call beautiful tax code, if he only took the standard marital deduction of $24,000, he would owe Uncle Sam over $9.5 million per year – or just under the top rate of 37 percent.
But this doesn’t reflect what he must pay to the states that charge their state income tax for the games that athletes play in their state.
So, every time Bryce plays against the Los Angeles Dodgers, the San Francisco Giants, and the San Diego Padres, he is likely paying the highest marginal state income tax in the country, at 13.3 percent in California (assuming over $1 million in compensation is attributable to his total California away games). His home playing field is a little better with a flat 3.07 percent of earnings paid to Pennsylvania. Then, the city of Philadelphia charges a “jock” or wage tax – which is an additional 3.456 percent if he is not a Philly resident, or 3.88 percent if he is. Assuming half the season is played at home, then half his annual earnings – or $13 million – would make the city at least an additional $450,000.
It is easy to see why nearly half of all baseball teams host spring training in the income-tax free state of Florida.
So, his tax bill on $26,000,000 per year (using standard deductions) is $9.5M, his state taxes are about $400,000 for Pennsylvania and roughly another million for the rest of the states, and he is limited to only writing off $10,000 in SALT, state and local taxes, under the new tax code. That takes us to about $11.5 million in taxes of his $26 million, or 44 percent. So, 44 percent of the time, Bryce is working for the government – 4 out of 10 catches, 4 out of every 10 throws – wherever he is, he should just point towards DC and say, that one is for you.
But realize, that this 44 percent is the BEST tax regime we have had since Reagan and FDR eras – meaning it is really low, historically speaking. But, that history will be ending — and fast — if the Socialists have their way.
Rep. Alexandria Ocasio Cortez, D-N.Y., proposes a top marginal rate of 70 percent on earnings over $10 million, while Rep. Ilhan Omar, D-Minn., just proposed a top marginal rate of 90 percent on the top 1 percent of earners – which is only those making in excess of $421,000 – what? Huh?
So, then Bryce would have a tax emergency! Under Ocasio-Cortez’s plan, he would have to pay Uncle Sam about $11.2 million on his earnings above $10 million alone, and a total of about 60 percent of overall earnings – over $15 million – before the states even take a bite. That equals 6 or more catches and throws out of 10, every single time he plays.
There was this famous California actor that refused to make more than two movies a year, because, he said, by the time he paid the federal and state income taxes, he would only make six (.06) cents on the dollar for picture number 3. That actor went on to become a president and gave us the most sweeping tax reform in over 50 years at the time.
Former President Ronald Reagan understood the unintended consequences and work disincentives that tax policy creates, because he lived it personally. This new generation of “tax-the-rich” politicians have enjoyed the last three decades of historically low tax policy because of President Reagan — and the lessons of our high tax past are lost on them.
Let’s hope this will remind them, no one wants to make 6 out of 10 throws for free.
Ms. Walser’s article was featured in Fox Business and Fox News – You can check it out here: https://www.foxbusiness.com/personal-finance/bryce-harpers-330m-contract-how-much-will-he-owe-uncle-sam