Athletes and Taxes

Boxing Superstar Manny Pacquiao plans on taking his next fight on November 24th to China because of the would-be near 40% federal income tax if the fight took place in the United States.   Americans for Tax Reform reported that Manny will save $5.5 million by using a venue in Macau, China and $3.9 million in Singapore, Indonesia.  This may appear to be greed, by leftists but it shows that in general people will migrate and invest in places that offer a higher incentive to conduct business.    If the United States is to be viable option for future international sporting events, they’ll need to seriously consider lowering the federal income tax level to a rate that draws athletes in – not out.

Mike Tyson was at the peak of his career in the 90’s but in 2003 he filed for bankruptcy and is reportedly millions of dollars in debt to the IRS.  Tyson claimed he’ll never be wealthy again and all his money goes straight to the federal government.  It may appear that Pacquiao understands the financial woes from the former athlete or just simply doesn’t like paying taxes. (That’s far cry from what Mike Tyson thinks) Either way the reason why Manny Pacquiao has decided not to hold his boxing event in the United States is because of incentives to pocket more money.

Athletes are typically slammed with dozens of tax jurisdictions to file so even the smallest incentives can mean a lot. The quarterback for the New York Giants football team, Eli Manning, lives in New Jersey to avoid living in New York and paying a higher rate of taxes.   Looking at incentives, It might be easy to see why Lebron James decided to play in Florida over New York because of Florida’s no state income tax policy and by picking Florida, James has reportedly saved $25 million. These athletes are given multi-million dollar contracts so it should be noted that the states with no income tax will naturally attract more athletes than those that have a high rate, same thing applies to why Pacquiao isn’t fighting in the US – taxes.

Even Phil Mickleson, PGA golfer, has suggested moving out of California because of the high taxes.   This is simply people operating off incentives and choosing options that lead to less of a tax burden.  At least in the case of the PGA golfer, the money stays in the United States.  The United States will always hold host to the Super Bowl and World Series, but if boxers begin to realize they’ll make more money overseas, what impact will that have on the future of international sporting events in the United States?