How Alexandria Ocasio-Cortez’s Tax Plan Would Change The NBA

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Written by Ann Brown
Congress
Rep. Alexandria Ocasio-Cortez, D-N.Y., left, talks with Rep. Ilhan Omar, D-Minn., center, and Rep. Haley Stevens, D-Mich., right, as they head to a group photo with the women of the 116th Congress on Capitol Hill in Washington, Friday, Jan. 4, 2019. (AP Photo/Susan Walsh)ASSOCIATED PRESS

Taxes. They’re a major issue for Americans. Politicians are continuously coming up with new tax plans. Count newbie congresswoman Alexandria Ocasio-Cortez on the list of politicians with a tax plan. During an interview with Anderson Cooper on 60 Minutes, Ocasio-Cortez offered a plan that would impose a 70 percent marginal tax rate on income earned above a $10 million threshold.

It isn’t a formal policy proposal yet, but Ocasio-Cortez suggests a 70-percent tax rate on the super wealthy to help fund the Green New Deal. Several other Democrats back the idea of the Green New Deal, which aims to address both economic inequality and climate change.

“Sen. Kamala Harris (D-Calif.) co-sponsored the Green New Deal resolution, which she touted as a ‘bold plan’ to address an ‘existential threat to our nation,’” The Hill reported.


Listen to GHOGH with Jamarlin Martin | Episode 41: The Bull Market And Why They Hate Ocasio-Cortez And Gabbard “Jamarlin Martin discusses the nasty stock market decline and why there’s trouble ahead for the global economy. He also discusses Alexandria Ocasio-Cortez’s proposal for a 70-percent tax rate on the wealthiest Americans, and why the military industrial complex and regime-change hawks hate 2020 candidate Tulsi Gabbard. “

Here’s how the 70 percent marginal tax would work, according Ocasio-Cortez: “You know if you look at our tax rates back in the 60s and you have a progressive tax rate system, the tax rate from zero to $75,000 may be 10%, 15% etc. But once you get to the tippy-tops on your $10 million, sometimes you see tax rates as high as 60 or 70%. That doesn’t mean all $10 million are taxed at an extremely high rate, but it means that as you climb up this ladder you should be contributing more,” said the congresswoman during the 60 Minutes interview.

While many Americans could be tempted by this plan — recent polling found a majority of Americans would support the hike — one has to wonder about jobs in which people make a lot of money in a short period of time and then their careers are over. Take NBA players, for example. They may earn more than the threshold but their careers are short-lived.

“One field with a disproportionate number of high earners is professional sports. Athletes aren’t pharmaceutical execs, though, and their careers rarely last past their mid-30s. What would a 70 percent marginal tax rate do to a league like the NBA?” Slate asked.

So how would Ocasio-Cortez’s tax plan affect the NBA?

According to Matthew Notowidigdo, an associate professor of economics at Northwestern University, a tax plan such as this would affect players in some bad ways and some good ways.

“Individuals near the $10 million mark aren’t going to bargain more for raises, and that surplus is either going to go to management or it’s going to be redirected to other players. That’s one mechanism where lower-paid players could benefit, where management transfers those resources to them,” Notowidigdo told Slate.

Would a salary floor become more important than the salary cap? “You’d see a lot more earnings compressed around the $10 million mark. It’s a kink in the tax code, and you’d expect a lot of people to end up right around that kink if they would have been close to there or slightly above there before. The same thing happens with the earned income tax credit at the bottom of the income distribution. There are a lot of people who are self-employed who end up reporting their income right around the point that maximizes their earned income tax credit,” Notowidigdo answered.

Also, what about NBA players who play in Canada for the Toronto Raptors? Even though there is no tax plan for the wealthy, U.S. players wouldn’t avoid the taxes by playing in Toronto — unless they renounce their U.S. Citizenship.


About Ann Brown

Ann Brown has been a freelance writer for more than two decades. Her work has appeared in CocoaFab, Black Enterprise, Essence, MadameNoire.com, New York Trend, Upscale, Moguldom, AFKInsider, The Network Journal, Playboy, Africa Strictly Business, For Harriet, Pathfinders, Black Meetings & Tourism, Frequent Flier, Girl, Honey, Source Sports, The Source, Black Radio Exclusive, and Launch. She studied journalism at New York University and has her B.A. Born in New York, Ann lived in Praia, Cabo Verde, for nearly a decade. She created “An American In Cabo Verde,” a Facebook community.