Many media outlets, including the Morning News, have picked up today on this post by the virulently-anti-tax interest group Americans For Tax Reform (the same group that’s convinced the majority of Republican members of Congress to pledge to never raise taxes under any circumstances whatsoever).
It claims that Dallas Cowboys quarterback Tony Romo’s recent 6-year, $108-million extension doesn’t just make him the fifth-highest-paid player in the NFL, as the raw numbers suggest. Because Romo plays his home games in Texas, which has no state income tax, they argue that he’s actually the highest-paid player after taxes. And they go on to make grand claims about the future of sports because of it.
Romo should serve as an example of why businesses and taxpayers are making the move to Texas. Under Gov. Rick Perry, Texas has continued to thrive and experience economic growth throughout the recession because of its low tax rates and economic competitiveness. While a handful of GOP governors are seeking to eliminate or lower their states’ incomes tax rates, such as Gov. Jindal and Gov. Brownback, more players will want to play in states where they will not feel the greatest tax sting. Some teams might even seek to relocate to one of these states.
Let’s set aside the absurd notion that any pro team is going to move to a state purely because of its income tax considerations.
The men ahead of Romo in terms of average annual salary — Joe Flacco, Drew Brees, Peyton Manning, and Calvin Johnson — do indeed all ply their trade for teams based in states with their own income taxes. But the Americans For Tax Reform analysis ignores a major obligation with which athletes must contend.
Nearly every state that collects income taxes requires visiting athletes to pay up too. When Romo plays games in Louisiana, or Maryland, or New York, he’s got to throw a little money their way. Therefore, since the NFL schedules for 2013-14 (not to mention for seasons to come) aren’t even officially released yet, there’s really no way to definitively say which of these multimillionaire football players is going to end up with the most money in bank after taxes.
Plus, I crunched a few numbers and I’m not even sure Romo comes out ahead of Flacco even in Americans For Tax Reform’s very rough figuring. Stay with me if you’d like to check my math.
Romo’s annual salary of roughly $18 million gives him a federal obligation of $7.12 million, leaving him with $10.88 million.
Flacco’s annual salary of roughly $20.1 million gives him a federal obligation of $7.95 million, leaving him with $12.15 million.
Then Flacco pays Maryland income tax (again, using the same simplistic estimates as Americans For Tax Reform) of 5.75% (plus $15,072.50). So that’s $1.16 million.
Meaning Flacco ends up with $10.99 million. (More than Romo).