Feb 15, 2013 Comments Off Pat Dollard
Excerpted from Americans For Tax Reform: With the announcement that top ranked boxer Manny Pacquiao will seek to hold his upcoming boxing matches away from the bright lights of Las Vegas and off U.S. soil, the Filipino boxer becomes the latest professional athlete to highlight the current non-competitive U.S. income tax rate. As reported by Yahoo! Sports:
[Pacquiao chief advisor] Michael Koncz told Yahoo! Sports that the 39.6 percent tax rate Pacquiao would face if he were to fight again in the U.S. makes a fall bout in Las Vegas “a no go.”
Pacquiao’s concerns lie with the federal income tax. As Nevada is one of the nine states that do not have an income tax, Las Vegas has grown to become the home for major bouts because fighters do not have to worry about the state taking a bite out of their winnings or purse. Unfortunately, Nevada’s economic benefit is now overshadowed by the federal income tax rate. According to Yahoo! Sports:
“Manny can go back to Las Vegas and make $25 million, but how much of it will he end up with – $15 million?” [boxing promoter] Arum said.
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: both casino and gaming markets comparable to Las Vegas and ideal to host a grand boxing event.
If Pacquiao or any other non-resident of the U.S. were to take a fight in these two markets and earn a $20 million purse, this is what their savings would be: