The business world isn’t alone in holding its breath amid the tax break deliberations in Washington, as sports stars raking in millions of dollars a year are sure to see their incomes tumble if Congress allows the Bush tax cuts to expire.
It goes without saying that the highest-grossing athletes like Alex Rodriguez and Tiger Woods are at most risk if lawmakers decide to let the 2001 and 2003 tax cuts expire at the end of 2010 as scheduled. While that seems farfetched at this point, Republicans and Democrats are worlds apart in what to do next.
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Pointing to the fledgling economic recovery, Republicans and some moderate Democrats support extending all of the Bush tax cuts. On the other hand, many Democrats are in favor of extending some stimulus measures, but due in part to the high deficit, allowing the cuts to expire for families making over $250,000 a year -- a category that includes the vast majority of professional athletes.
With that in mind, FOX Business looked at how much the tax burden of several notable athletes, coaches and owners will change based on what Washington decides. The tax bills are based on 2010 salary figures cited by Sports Illustrated and tax rates provided by the Tax Foundation, a nonpartisan tax research group.
Tiger Woods, who topped the SI Fortunate 50 list in 2010 by bringing in an estimated $90.51 million in winnings and endorsements, would really feel the pain. His 2011 tax burden would total a whopping $35.81 million, up $4.16 million from 2010, if the Bush tax cuts expire. Under the Democrats’ plan, Tiger’s tax bill would be $35.80 million, $4.15 million more than under the GOP plan.
Alex Rodriguez may also be worrying about Washington’s tax debate as the Yankees third baseman is expected to bring in $33 million in salary and $4 million in endorsements this year. If those wages carry into 2011 and Congress lets the tax cuts expire, his burden would jump by $1.7 million to $14.62 million. Under the GOP plan, A-Rod’s tax burden would still total $12.92 million, or $1.69 million more than the Democrats’ proposal.
It’s not just athletes who can expect their tax bills to rise. Los Angeles Lakers head coach Phil Jackson, who led the NBA coaching ranks by bringing in $6 million in wages in 2010, would see his burden rise $270,352 in 2011 if his salary holds steady and the Bush tax cuts expire. Under the Democrats’ plan, Jackson’s burden would be about $2.33 million, about $443,000 higher than the GOP plan.
Dallas Cowboys owner Jerry Jones may have the most to lose among the sports stars. According to Forbes, his franchise, which ranks as the most valuable in the NFL, saw its value rise by 9% in 2010 to $1.8 billion, an increase of $162 million. Based on that metric, Jones’s income tax burden from his Cowboys ownership would rise by $7.45 million if the Bush cuts are wiped out. The outspoken owner’s tax bill would stand at $64.12 million, or about $7.44 million higher than under the Republican proposal.
Click here to read the full list of athletes in this FOX Business slideshow.