How Alexandria Ocasio-Cortez’s tax plan would change the NBA

Europe has multiple leagues that are comparable in quality. Spain’s La Liga is similar to England’s Premier League, and the German Bundesliga is up there, too. If NBA players were to leave to play in Europe, I imagine it would be a much greater change, both personally and professionally.

I don’t think [the NBA and European soccer are all that similar to each other], but this is an example of an academic paper by very well-respected people that are looking at the migration responses to tax changes. I thought about it and looked at some of the contracts in the NBA, and one thing I’d want to look out for is at that $10 million mark, that’s a huge jump in the marginal tax rate as it’s being talked about right now. I think what you’d expect to see is a lot of what economists would call “bunching” of people’s salaries at $10 million, using deferred compensation to get people away from paying that 70 percent tax rate. A natural way to get around it would to be to just backload your compensation so that after retirement or at some point in the future you’re going to get lots of money, but you never earn more than $10 million in any year of your contract.

So you’d have players signing contracts for 25 years rather than five years.

Yeah, it’s like the Bobby Bonilla days. [Retired New York Mets player] Bobby Bonilla is getting paid for the next 20-something years, and I could imagine NBA players would commit to earning $10 million a year—they could still sign a higher contract, but all the compensation is just going to get pushed to the end.

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