So what percentage of Kobe's 135 mil will get taxed?

[doozyj]

Kobe runs and supports several non-profits so he gets a lot of tax cuts.

You have to shell out cash in order to get those tax cuts, so...

But think of all the comfort he gets for being charitable so he comes out ahead.

[LakerFanMan]

After the tax deductions and fees for his agent, it comes out to about 14 million per year on a 5 year 135 million dollar deal (totaling 70 million over 5 years). According to some quick math. That doesn't include things like property tax, the money he owes me, people that work for him,etc....

[KWSN-Men]

The new federal rate under Obama for his bracket is 38.5%. For his bracket in California it is 10.3%. For his agent fees it is 4%. Therefore, 52.8% of his income will be gone before he sees it. So it seems he would pocket $63.72 million out of the $135 million. So he would pocket about 47.2% of the money. Per year then it's like $12.744 million net a season.

You can see why those European net contracts are enticing to some NBA players.

[Social Lubrication]

If Kobe is paying anywhere near the amount of tax he should theoretically be paying, I would be shocked. People with that kind of wealth hire tax specialists who shelter their money and find every loophole possible so as to minimize the amount of tax they pay.

[KWSN-Men]

If Kobe is paying anywhere near the amount of tax he should theoretically be paying, I would be shocked. People with that kind of wealth hire tax specialists who shelter their money and find every loophole possible so as to minimize the amount of tax they pay.

But Kobe can't do that on his NBA salary. You can't hide a salary that is openly reported in US media. Sure on all his other incomes like say endorsements - yes he can hide that and do all kinds of illegal stuff that rich people do to not pay taxes on it. However on the NBA salary that is openly reported and made public and printed and discussed all over news articles, you can't hide that.

[Gutter92]

Now tell me you're kidding. OMFG. Dude you realize a salary is Federal. You pay state taxes where you reside and states taxes aren't 50% ever ever ever ever.

Thanks doozyj for informing the uninformed. In Cali we're taxed 9.25% for every dollar earned.

That's good for you guys. But Kobe happens to make money in other states, too. So, he is taxed according to their tax laws, I believe. Also, read the posts on page 2(or 1) about the Jock tax.

Good to see you're back on the GB

[doozyj]

Regardless if he is paying the "jock" tax, it may work out beneficial for him as the money that is earned out of state is taxed at the other states tax rate which is lower as we all know California has the highest tax rates in the country. See Kobe always comes out ahead.

[Kobay]

As a resident in CA, all I can say is you will get robbed.

[Puertorique]

To be more clear. This is a tax that doesn't only effect Kobe but pretty much all athletes. This tax is also used for actors and entertainers. So Anthony Parker has to pay tax in the other states just like Tom Cruise ex.

The reason it is called a jock tax is because athletes are the ones effected most by it. For example the Miluakee Brewers are hit by this tax because they may play the Cincinati Reds who have a 2.1 percent jock tax in Cincy alone. If The state of Ohio has a jock tax of 2.1 percent the athlete and the Actor have to pay that also, once again example, I know Cincy has a 2.1% tax dont know if the state has one also. So if a Actor is on set for one day in Cincy they have to pay a one day tax to Cincy, while someone on the Brewers would have to pay for each day that the team is there. So lets say that the team is in Cincy for 12 games in a baseball schedule those 12 days they have to pay. That is why it's called a jock tax.

Also understand this is a different tax then the one that was mentioned above about paying tax in the state you work. That is a completely different tax that athletes and entertainers have to pay also.

[Puertorique]

As a resident in CA, all I can say is you will get robbed.

As a former CA resident of 7 years I can agree with that also.

[KobeFan]

5 year $100M contract

-$12M agent (agents typically make 10-12% on any endorsement/contract)
-$40M taxes

take home $53M

When you make several million per year you have publicists, accountants, grunt workers, personal trainers, assistants, etc which comes out to a million in payroll probably just to manage the money and keep everything organized and going.

When ALL is said and done, I'd estimate that out of a 5 year $100M contract, a player sees maybe $40M of that in cold hard cash -- to do with it as he wishes.

[Puertorique]

You also need to include property tax into that amount. So lets say he has a $4mill home, I'll be nice and say that his property tax is about $70,000 a year right now, given that it's in Huntington Beach CA it's probably quite a bit more then that, I'm just being nice.

[Ito]

does it really matter?

Is kobe, lebron in 2010, and who the cavs should get this off season really all we have for discussion over here? I think im taking a break til next season starts...

[Mamba Venom]

Kobe should get a house in Cabo LOL
Keep that extra 60 mil

Don't foreign players do that?

[doozyj]

los

You also need to include property tax into that amount. So lets say he has a $4mill home, I'll be nice and say that his property tax is about $70,000 a year right now, given that it's in Huntington Beach CA it's probably quite a bit more then that, I'm just being nice.

Property tax is about 1% of assessed value. I pay about 1% here in SoCal as well, I don't think it can be over 1%??? So I think Kobe would be paying about $40K per year, if the home is still assessed at $4MM which it should.

[Heat3]

I doubt management costs are more than 10% and someone like Kobe doesn't have car payments lol He might have a mortgage at best, but he's rich enough to write a check for a house.

Also LOL at having to pay taxes in every state he plays in...WTF?!

He is EMPLOYED BY THE LAKERS. So he only gets taxed by where his employer is. Road games are just like business trips. He still works in LA. If he lived and worked somewhere else full time then he would have to pay those taxes.

For example, my employer is in Minnesota, but I live and work in Florida fulltime. So I only worry about fed taxes since there are no Florida state income taxes.

[maxwellcu]

When discussing effective tax rate, it is also appropriate to consider things like property tax, sales tax, etc.

Ultimately, the government in these situations, assuming no tax sheltering or creative accounting, which you can safely assume is not an option for high-profile individuals, can be safely assumed to be taking significantly over 50% of an individual's income. How efficiently the government uses said revenue is a different discussion altogether.

This is why people should never be shocked when entertainers or athletes end up going broke shortly after their careers are over. They pay a very large portion of their income - occasionally a majority of their income - in taxes. Then consider the lavish lifestyles, ownership of multiple homes (if they are smart they will own them outright at least) and several cars, $1,000 meals, $10,000 nights at the club, taking care of the spouse, who will likely be demanding, taking care of the kids, taking care of friends and family, charitable contributions, gifts to their alma maters, often child support, personal assistants, etc. etc. etc. After athletes retire, it is not uncommon (particularly among football players) to have life long medical problems that are very expensive to address. Perhaps the biggest kicker here is that most of these guys are working until they are 30 or 35, then they are pretty much left without an income for the rest of their lives but still want the lifestyle of a baller.

Long story short, it is easy to understand how a lot of these guys are broke as soon as they exit they league. IMO the NBA and other professional sports leagues should put a more real effort into impressing upon some of the young kids making millions in their respective leagues that the money does go away and that they need to be careful with it. Most professional athletes make more than enough money over the course of their careers to live an excellent lifestyle for their entire lives. However, my understanding is that it is extremely commonplace for them to end up flat broke a couple years after their playing careers are over.

[tombo125]

If Kobe is paying anywhere near the amount of tax he should theoretically be paying, I would be shocked. People with that kind of wealth hire tax specialists who shelter their money and find every loophole possible so as to minimize the amount of tax they pay.

But Kobe can't do that on his NBA salary. You can't hide a salary that is openly reported in US media. Sure on all his other incomes like say endorsements - yes he can hide that and do all kinds of illegal stuff that rich people do to not pay taxes on it. However on the NBA salary that is openly reported and made public and printed and discussed all over news articles, you can't hide that.

He was talking about legal means I think.

[FGump]

The new federal rate under Obama for his bracket is 38.5%.
For his bracket in California it is 10.3%.
For his agent fees it is 4%.

I don't know if his agent gets more or less than 4% - those numbers are always negotiable - but your tax numbers are right on target.

Other states may charge him tax, but the practice in most states is that you get an offset against your home state tax for taxes paid to other states, so he'll still be paying a net of 10.3% overall in state income tax.

You also need to add in the Medicare tax which is 1.45% with no cap on income.

In general, a rough estimate of "half" is usually pretty close to what the high earner pays in taxes.

[Dunkenstein]

I don't know if his agent gets more or less than 4% - those numbers are always negotiable - but your tax numbers are right on target.

While the agents percentage is negotiable, an agent cannot get more than 4% under rules set by the Players Assn.