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Obama Throws Up Brick for NBA

Posted By John Fleming On November 3, 2008 @ 2:18 pm In Economics | Comments Disabled

Barack Obama on baseketball court (Photo by Emmanuel Dunand/Newscom)

NBA owners and players will have to swallow hard if that avid hoops fan, Barack Obama, is elected president and pushes through his tax plan.

It’s not just players like Celtics star Kevin Garnett, the league leader in pay, who’d have to figure on paying more in federal income taxes. In fact, the NBA’s 20 highest-paid stars each would lose, on average, an additional $1.2 million to an Obama administration. [1]And plenty of American players could increase their net incomes by signing with overseas franchises. (Obama and running mate Joe Biden might call that “unpatriotic” and “selfish.”) [2]

Making the connection between Obama’s tax proposals and our favorite pro basketball team is something of a head-scratcher. Many of us don’t ponder income taxes much beyond our W2s.

To get the picture,  survey the landscape of the NBA. The past few years saw a quiet exodus of players heading overseas to join pro leagues in Spain, Greece and Russia [3]. Some are Europeans. They play in America for several years, get some money and experience, then return home — often for a healthy pay raise. Nenad Krstic, a 7-foot center, averaged 11.3 points a game with the New Jersey Nets. He signed a one-year deal for $9 million to play for Triumph Moscow. Not bad for a guy who earned a total of $4.9 million in four years with the NBA.

Because these players aren’t superstars, the departures make little news outside their NBA cities or on the ESPN news crawl. The loss of American-born NBA veterans — former Atlanta Hawks guard Josh Childress and journeyman Earl Boykins accepted lucrative offers to play in Europe — raises few eyebrows. Yet other nations exhibit a growing appetite for basketball. And like their American counterparts, foreign franchises will pay big money to win championships.

Obama’s tax plan, like John McCain’s, is pretty well documented. The Illinois Democrat says he’d raise income taxes only for “rich” families earning more than $250,000 a year and individuals earning more than $200,000. (McCain pledges not to rescind the 2001 and 2003 tax cuts for anyone.) [4]

Obama’s $200,000 trigger would target every NBA player under a full-season contract. They all earn more than twice that, since the league’s minimum salary for rookies tops $442,000. The biggest earners certainly may be called rich. They’re led by Garnett, who enjoys a $24.8 million salary for the 2008-09 season. The average NBA salary is $5.3 million.

Players know they’re in the top tax bracket, so maybe they accept that an Obama administration would raise their taxes. Just how hefty would those increases be, if a President Obama got his way?

Garnett could expect to pay $1.6 million more in federal income tax, for a total of $10.2 million, according to calculations by the Center for Data Analysis at The Heritage Foundation [5]. That’s 41 percent of Garnett’s total income, not counting state and local taxes.

Right behind Garnett in line for the Obama tax hikes: Toronto’s Jermaine O’Neal, the Mavericks’ Jason Kidd and the Lakers’ Kobe Bryant, who each make just over $21 million. Each player would have to hand over an extra  $1.4 million in federal income taxes, bringing his total to $8.8 million. As a group, the NBA’s Top 20 players alone would provide about $25 million more wealth for a President Obama to spread around. [1]

And get this: In Russia, signing a pro contract — like the $9 million one Krstic signed — would net players more money after taxes than a comparable contract here. Why? Russia’s top tax rate for non-residents is 30 percent.

Consider Drew Gooden, new center for the Chicago Bulls. A quality veteran, Gooden has averaged 12 points and eight rebounds per game over a seven-year career. He’s slated to earn $6.5 million this season.

When Obama makes good on his promise to raise Gooden’s  taxes by more than $400,000, for a total of $2.7 million,  it shouldn’t surprise anyone if Gooden takes a look at Moscow, calls his agent and insists, “I know I’m better than Nenad Krstic!”

If some of the best players leave the United States for foreign lands, would NBA fans keep watching? A deteriorating product on the court, following years of obscenely high ticket and concession prices, is going to prompt everyone from Joe the Hoops Fan to Jack Nicholson to make choices.

But let’s keep our perspective on Obama’s tax increases. After all, we’re just talking basketball. It’s not like we’re talking real businesses [6], right?

(Note: John Fleming, who admits to being a Detroit Pistons fan, is senior graphics editor at The Heritage Foundation. He is obliged to senior analyst Rea S. Hederman Jr. and researcher Patrick Tyrrell of the Center for Data Analysis, who crunched tax numbers.)


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2008/11/03/obama-throws-up-brick-for-nba/

URLs in this post:

[1] In fact, the NBA’s 20 highest-paid stars each would lose, on average, an additional $1.2 million to an Obama administration. : http://www.heritage.org/Press/images/SPECIAL-nba-salaries-table-.gif

[2] “unpatriotic” and “selfish.”): http://rightvoices.com/2008/10/31/obama-video-you-dont-like-higher-taxes-youre-selfish/

[3] The past few years saw a quiet exodus of players heading overseas to join pro leagues in Spain, Greece and Russia: http://sports.espn.go.com/nba/columns/story?columnist=adande_ja&page=eurodraw-080809

[4] The Illinois Democrat says he’d raise income taxes only for “rich” families earning more than $250,000 a year and individuals earning more than $200,000. (McCain pledges not to rescind the 2001 and 2003 tax cuts for anyone.): http://www.heritage.org/Research/Economy/wm2101.cfm

[5] Center for Data Analysis at The Heritage Foundation: http://www.heritage.org/cda/

[6] real businesses: http://www.heritage.org/Research/Taxes/bg2203.cfm

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