Although it makes no sense at all, California will tax Cam Newton more money than he will make in the Super Bowl because, well, they are California.
The short version is that California will tax the All-World QB (and every player on the field Sunday) based on their earnings for the entire year, all because of a few days inside the state.
I’ll let the smart guys at Forbes explain in detail:
If the Panthers win the Super Bowl, Newton will earn another $102,000 in playoff bonuses, but if they lose he will only net another $51,000. The Panthers will have about 206 total duty days during 2016, including the playoffs, preseason, regular season and organized team activities (OTAs), which Newton must attend or lose $500,000. Seven of those duty days will be in California for the Super Bowl and another four will be in the Golden State for road games against
St. LouisLos Angeles and Oakland next season.
Win on Sunday, and Newton will pay California a total of $159,560 in taxes in 2016. Lose, and he will pay $159,200, based on an income reduction of $51,000.
To determine what Newton will pay California on his Super Bowl winnings alone, we will ignore the four 2016 season duty days and pretend they are being played elsewhere. In looking at the seven days Newton will spend in California this week for Super Bowl 50, he will pay the state $101,600 on $102,000 of income should the Panthers be victorious or $101,360 on $51,000 should they lose.
The result: Newton will pay California 99.6% of his Super Bowl earnings if the Panthers win. Losing means his effective tax rate will be a whopping 198.8%. Oh yeah, he will also pay the IRS 40.5% on his earnings.
Looks like professional athletes should follow the same advice as small businesses in California: