News flash: Everybody has to pay income tax


NFL rookies are required to attend "How not to mess up your life like those other professional athletes" training. They learn about such things as sexual harassment, AIDS, common-law marriage, and, of course, taxes.

Kendrell Bell, a Pittsburgh Steelers linebacker, tells of his great awakening to the verities of income tax: "I got a million-dollar signing bonus. But then I got the check, and it was only $624,000. I thought, Oh, well, I'll get the other half later. Then I found out that's all there was. I thought, They can't do this to me. Then I got on the Internet and I found out they can."

Shocking! Football players have to pay income tax! Where will the injustice end?

[Update: Yes, this is an inadvertent repeat. The link is better, though, not requiring a New York Times subscription.]

Comments (24)
  1. Ha ha! I catch you Raymond! You’re recycling your old stories ;-)

  2. Valdas says:

    "…only $624,000."

    Should I say more?

  3. waleri says:

    So I earn a million, then pay 38% taxes

    With the remaining 640K I purchase a yacht from my neighbour.

    Assuming the income taxes are same, the guy will have to pay another 38%, that would made about 220K

    So I have to earn a million, to purchase something that costs 372000?

  4. Kendrell Bell says:

    Who is this guy Fica and why does he get so much of my paycheck?

  5. geoff.appleby says:

    News Flash: Footballers Know How To Use The Internet???

  6. oldnewthing says:

    Serge: Rats, I lose track of which stories I’ve alrady told. But since it seems lots of people don’t read my archives (and ask questions I’ve already answered) I may as well join the crowd!

  7. RichB says:

    Isn’t this a repeat of a previous OldNewThing?

  8. mph says:

    Well, keep in mind that lots of football players started out in the lower end of the economic spectrum. If you grew up in a household that was in a low tax bracket, got EIC, maybe had lots of kids (exemptions), etc., you’d probably be a little shocked at the top-end bracket.

  9. Stepeh Jones says:

    The guy who says you have to pay income tax on the money you get for selling your yacht is wrong. That ain’t income, and even if you sell yachts for a living, you’ll only pay income tax on the profits you regualarly get after your accountant has gone through it.

    I don’t know about the States but the guy would be pretty stupid if he lived in Europe and got the signing fee paid to himself. You get the signing fee paid to an offshore company in the Caymans that is set up to handle your promotional interests. The company is 100% owned by you, but you arrange it so you only pay income tax on the money your own company pays you.

  10. Who can count the broken hearts that will be mended once the government gets its hand out of our back pocket and returns to consumption taxation…?

  11. bramster says:

    Only 38%?

    Ah, but there’s that 7 trillion that’s waiting to be paid. . .

    I’ll stay in Canada.

  12. "Ah, but there’s that 7 trillion that’s waiting to be paid. . ."

    We really only have to worry about the debt in the form of Treasury bonds. The rest we can shove under the carpet.

    38% only applies to people making mad bucks. Which (I assume) doesn’t include me or most of the people here.

  13. grouse says:

    Now I know why this blog is called The Old New Thing.

  14. Ryan says:

    The money for the yacht might be income, or cap gains depending on when you bough the yacht, how much you paid, if you depreciated it as a business asset and expense.

    I yearn for a post card sized return.

  15. Jonathan says:

    I’d pay 38% happily. The marignal income tax here in Israel at fairly low brackets ($60k a year) is 49%, not including another ~9% for social security and health tax.

  16. DavidE says:

    I think you’re being too harsh. When he got the signing bonus, did they tell him in advance that he would be losing a lot of it to taxes? I’ve known people in the computer industry who got upset when they got a bonus or royalty check that had the taxes taken out. They simply thought that the bonus wasn’t "income" and therefore not subject to taxes. Also, keep in mind how young these guys are. At 25, I made the mistake of not rolling over a retirement account because I didn’t know what was going to happen. I spent the money, and then the next year I got hit with a big tax bill because of what I did.

  17. Jim says:

    Here in Massachusetts, they are even trying to tax non-resident athletes for their income based on the number of days they were in the state to play.

    http://www.massdor.com/help/guides/abate_amend/Personal/issues/tradeBussExp.htm

    (search for "professional athletes")

    Massachusetts, being a liberal state, even has an optional HIGHER tax rate that residents can choose to agree to. You don’t get anything for paying the higher rate except that warm fuzzy feeling that the all-good tax man is spending your money more wisely than you ever could.

  18. Will says:

    640K ought to be enough for anyone ;-)

  19. waleri says:

    > 640K ought to be enough for anyone ;-)

    38% should be enough too.

  20. Seems like these players also don’t realize they have to use toilets like everyone else. From the article:

    "Despite spending $750,000 on the symposium, the N.F.L. would not, as Ahlerich predicted, save all souls. A week later, Najeh Davenport, the baggy-pants defender, was also arrested, on charges dating back to April. In the wee hours, Davenport supposedly entered a women’s dormitory at a Catholic university in Florida, found his way into a sleeping student’s room and, for reasons that remain unclear, defecated in her laundry basket."

  21. Wendy House says:

    What I dont understand is why employers remain complicity in perpetuating the situation that causes this upset new signee.

    For example why dont the employers advertise the signing-bonus size as it is actually received (AFTER tax deduction). Why dont the negotiate a standard that involves each advertising and actual take-home amount. Call me a hick from the sticks- but it seems more open and honest.

    Similr problem in Washington (State) stores. In the UK the sales tax is included in the cost of items advertised in the store. You look at the advertised price and you know what you’ll pay. In Washington state, you look at the advertised price go to the check-out and find it costs more than ‘advertised’. Even if you know to expect this bizarre yax added after advertised price you still have to perform some calculation to work out the ACTUAL price then you aren’t suprised at the till.

    For goodness sake! since the store has to make the calculation anyway (currently at check-out) why dont they just move this calcualtion earlier in thier business process? Put it as the price of the article to the customer. For example, WA state could introduce a policy of showing actual price to the customer rather than pre-tax prices. Currently its like a silly systematic tease -that serves little benefit other than adding a ‘calculation’ work-load to the customer. Now that’s not good customer service, come on Washington, pull your socks up..

    I’ll calm down now.

  22. oldnewthing says:

    One problem is that not everybody has the same income tax rate. If you win $1000 in the lottery, your winnings after federal income tax range from $650 to $1000 depending on your bracket. And that’s not counting the other applicable taxes (depending on the time of year, my social security tax varies).

    In Washington, sales tax rates change from city to city. If you’re a company with multiple stores, your advertising flyer will have to print mutiple prices. I believe in Europe the law requires that the price on the item be inclusive of all fees and taxes. I remember picking up a magazine that had no less than 10 different prices printed on it, because it was available for sale in 10 different tax jurisdictions.

    That said, I too would prefer that all values be quoted in "net", if only it were practical.

  23. Then again, that’s why you’re taking the class, right?

Comments are closed.