Taxes and Football

At the Locke Foundation, we talk a lot about how high tax rates can hurt a state’s economy by driving away new businesses or making it more difficult for existing businesses to hire people.  But how about this?  New Jersey, where Super Bowl XLVIII will be played on Sunday, taxes athletes so heavily that Peyton Manning could actually end up owing the Garden State more in taxes than the entire value of his Super Bowl earnings.  Yes, you read that correctly.

Hosting big events like the Super Bowl is good for an economy.  It’s great to have all the fans and press in your city.  They’re all eating and drinking and staying in hotels.  They may hit some other tourist attractions while they’re there.  The venue employes people.  Those sorts of effects are real.  When states raise taxes associated with these and other large events, like those on athletes, they make themselves less attractive venues.  Yes, New Jersey still got the Super Bowl, but now that everyone’s aware just how heavily the players will be taxed, will the state be more or less likely to attract the next big sporting event?  In individual sports, like boxing, will athletes just choose not to participate if the taxes are too high and opt for other locations instead?

It’s no secret that athletes already try to avoid establishing residence in high tax states, even if they play for teams located in those states.  Businesses and wealthy individuals often do the same.  When considering taxation, North Carolina’s legislators would do well to remember this.  A simple tax code, with low taxes for all, is the best way to attract business – whether that’s a small, local business or a major sporting event – and boost the economy for all.

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