The NFL estimated that the game would bring $434 million to the city. While some economists
scoff that the real impact is just a fraction of the official estimate,
there's no doubt that the Big Easy was thrilled to host their tenth
"Big Game." Most of that revenue goes to the hotels, restaurants, and
souvenir vendors who open their cash registers to affluent visitors.
(While face value for game tickets was "just" $1,015, the average fan
paid $3,000 for his seat.) Millions more goes to the bartenders,
waiters, cabbies, and hotel staff that take care of those fans. But some
of that money actually goes to the players, too. The NFL gave each of
the winning Ravens a ring worth $20,000 plus another $88,000 in cash.
The losing 49ers didn't get a ring, but still walked away with $44,000
for their valiant effort.
So . . . with numbers like those on the field, do you really think the tax man can resist throwing a penalty flag or two?
turns out Super Bowl LXVII was pricier than usual to win. That's
because Uncle Sam has drafted three rookie taxes for players to tackle.
Last month's "fiscal cliff" bill raised the top tax rate from 35% to
39.6% on ordinary income topping $400,000 ($450,000 for joint filers).
The fiscal cliff bill also phases out personal exemptions and itemized
deductions for taxpayers earning over $250,000 ($300,000 for joint
filers). Considering that the 2012 league minimum ranged from $390,000
for rookies to $925,000 for 10+ year veterans, those new taxes will hit
every player on the field. And the 2010 Affordable Care Act adds a new
0.9% Medicare surtax on earned income topping $200,000 ($250,000 for
joint filers). The 2012-level tax sacks each winning Raven for $41,000;
the 2013 "extras" rough them up for another $4,860 or more.
Uncle Sam wasn't the only one paying attention. Don't forget the Bayou
State and the Crescent City! Much of the money that comes into New
Orleans heads right back out to the national corporations that rent
hotel rooms, serve those meals, and sell those tacky t-shirts -- but at
least it gets taxed locally. On January 30, the Louisiana Department of Revenue issued a helpful two-page bulletin
alerting visitors that, "according to Louisiana Revised Statute 47:290,
a tax is levied on all nonresident individuals who have income earned
within or derived from sources in Louisiana." That "jock tax" reaches 6%
on income over $50,000 ($100,000 for joint filers). Louisiana's tax
compares with zero in Florida, which has also hosted the Super Bowl 15
times, and a whopping 12.3% in California, which has hosted it 11 times.
Of course, none of the players actually care how much tax they'll pay on their bonuses. They just want that ring! But there's still a lesson here for some of you. We've said before that how you earn your money makes a difference in how you're taxed. It turns out that where you earn it and when you earn it makes a difference, too. Our answer, as always, is proactive planning to help you make the smartest decision. If you don't already have a game plan, the play clock is ticking!
Hoffman counsels Entrepreneurs, Professionals and Select Individuals in
taking control of their taxes, and businesses. Discover how I can help
you overcome your tax and business challenges. To start the conversation
or to become a client, call Kenneth Hoffman at (954) 591-8290 Monday -
Friday between 8:30 a.m. to 1:00 p.m. for a no cost consultation, or
drop me a note.