Comment by gamblor956 | Hacker News Reader

Comment by gamblor956 | Hacker News Reader

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The only thing I hate is how many athletes who have such short 3 year windows have half their income taxed for those three years then go on to work “normal” jobs for the next 30 years, and someone who ultimately made the same income over 30 years at a high paying “normal” job got taxed so much less over the same time span.

Athletes do not get taxed on "half their income." Each bracket of income is taxed at a progressively higher rate, so the first $10k for everyone is taxed at the same 10% rate. The next $30k for everyone is taxed at the same 12% rate. The next $45k for everyone is taxed at the same 22% rate, etc. The highest bracket is 37%, and only the dollars above ~$520k are subject to that 37% rate. Even including state income taxes, only persons making more than $600k are subject to the highest theoretical rate (which is below 50%), and even then only on the dollars earned in excess of $600k.

So, for example, if Superstar BBaller earns $601k in wages for playing for the LA Hoopers, he pays $58k in taxes to CA (the mathematical total of the progressive lower-taxed brackets), plus $123 for the $1k over $600k. He pays the feds approximately $150k for the lower-taxed brackets, plus $30k on the $101k in excess of the $520k threshold for the highest-taxed bracket.

And even that example overstates the taxes he pays, since it excludes deductions, tax credits, state tax credits, etc., that would lower the actual tax paid.

That is a 39% tax rate.

That feels like a pretty big percent.

That is a 39% rate on the income they make over $500k. That income was made possible by the laws and government activities that made people willing to spend $100/ticket or more to sit in a stadium/arena and watch the athlete play for an hour while millions of others tune in from the safety of their homes during their leisure time.

If the athlete doesn't like having a low 39% tax rate, they are free to move to Europe, where the same income is taxed at over 50%, or to Asia, where they won't pay as much in tax but they would also be making considerably less money before and after tax.

You’re missing the point.

A lot of these athletes come from very underprivileged backgrounds and worked their asses off to get there even then they often in the NFL let’s say have 2 year careers.

Let’s say they made 500k over two years so they take home 600k. Now they’re out of the NFL and make 50k a year for next 8 years. So over 10 years they make 1.4 million, but take home maybe 950k.

Meanwhile the person from a privileged background went to Stanford got a job in software at 140k a year. Over 10 years they gross 1.4 million but the total they took home is more than this athlete you so deride.

No, you're missing the point, and worse, you're using fundamentally bad math and data to do it.

An athlete that made 500k over two years, i.e., $1 million total for his career, took home at least 600k, because the $500k was his gross income, not his taxable income (i.e., inclusive of deductions and credits). In other words: for two years of work, he made at least $600k, and made at least another $320k over the next 8-years post-tax, for a net take-home of at least $920k. That also ignores the usual side-streams that professional athletes receive (in the US): endorsements, image rights (aka, such as for each year's Madden), jersey/uniform sales, and post-athletic-career pensions. (Note that for each league, the vesting period for the league pension is shorter than the average career in that league.)

Of course if you assume the athlete blew their $600k+, had no other income, and somehow had an average-length career but failed to qualify for a league pension, they made less than the software engineer. But, if like most athletes aware of the short nature of their careers they invested it, then over the 10-year window they would have made an average of about 30% returns; if that window was the past 10 years, they would have made more than 200% returns. Either way, significantly more than the software engineer.

Your position assumes that athletes are too stupid to properly manage their money, and the derision is all solely on your end. My position assumes that athletes are intelligent enough to manage their finances.

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