Avoid high taxes, stay outside America

This week, Americans for Tax Reform published an piece about boxing and, more specifically, the decision by Manny Pacquiao not to fight in America any time soon.  Why?

For boxers who stand to earn over $1 million per fight through winnings, pay-per-view revenue shares, fight bonuses, and other forms of taxable income, they will be taxed at the top marginal income tax rate of 39.6 percent. Pacquiao, boxing’s second biggest PPV draw, understandably views boxing in America under this tax rate to be a bad business decision.

Since Pacquiao is not a U.S. citizen or permanent resident, he can keep a larger percentage of his fight earnings by taking fights outside of the U.S. The other options Pacquiao and his management team have considered are Macau and Singapore…

They even include a useful chart, showing how his tax liability, and therefore his take-home pay, would vary in the US, Macau, and Singapore.  It’s a difference of millions of dollars.  And, as the piece points out, for professional boxers and other athletes who have relatively short careers, that’s a really big deal.

And it doesn’t just affect the athletes.

Fewer boxing matches per year would mean fewer vendors, a decrease in tourism, and less money being spent in host cities. Hosting a major sporting event has proven to create jobs and insert economic life within the city.

The ATR piece sums it up by observing, “At the end of the day, people migrate and invest in places where they will receive the most for their services and skills.”  That’s true whether you’re a professional boxer, a multi-national corporation, or the owner of a small business.

The John Locke Foundation has proposed a plan for tax reform in North Carolina that would simplify the system and make the state a more appealing destination for businesses and individuals.  There are various proposals on the table.  But at both the state and federal levels, lawmakers should simplify and lower taxes to increase our ability to attract and retain businesses and the jobs they bring with them.

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