This is a PS (public
service) announcement to all entertainers and athletes….PLEASE PAY YOUR
TAXES-THANK YOU!
Some day, entertainers and athletes will understand that all of their money is not their money. It is very easy to believe all of your money is your money when your contract is posted on every entertainment or sports news website, newsstand, newspaper or magazine article all over the world. The only reality in a salary is TAXES.
According to Bank Rate.com, the 2013 tax bracket for entertainers and athletes making over $450k (k=thousand) is roughly 40%. See chart below:
This is almost half your salary. Some may say, “Wow, that is way too much to pay in taxes”. Others may say, “I would rather make $500k and pay 40% in taxes ($200k in taxes = $300k cash – minus state tax wherever you live) than make the salary I am making on the job I hate.
So far, it seems that a great number of entertainers have not understood that you must pay your taxes in order to stay ahead of the game. Many of us have heard of the popular ones who have fallen to tax issues. According to USA Today.com, some of those celebrities include actor Robert Downey Jr., comedian Sinbad, singer Robin Thicke and more.
Below is one example I would like to discuss where it comes to "All of Your Money Is not Your Money". Boxing legend Mike Tyson has fought in some of the most historic fights in boxing history. From being the youngest champion when he knocked Trevor Berbick back to the future to the Evander Holyfield fiasco with biting his ear.
See Tyson vs. Berbick video from YouTube:
People have constantly tried to figure out how did Mike Tyson go broke. Here is a brief scenario of how it COULD have happened. Not how it happened exactly, but how it COULD have happened.
According to Black Enterprise magazine, Mike Tyson amassed over $300 million in his career. Let’s assume Tyson had 10 fights at $30 million each totaling $300 million. That is $30M per fight at 40% taxes = $12M in taxes alone. Leaving Tyson with $18M in cash minus state taxes where Tyson fought or from taxes at home. Lets say Mike paid 5% in state tax = $1.5M leaving $16.5M. Still a lot of money right? Don't forget, Mike still has to pay the promoter, who at that time was Don King.
According to Boxing Insider.com, King may have been receiving up to 50% percent as documented by Jack Newfield in his book "Only in America: The Life and Crimes of Don King". Plus Tyson’s boxing manager/corner man and other corner people. Then you have the lackeys who just hang around to get something for nothing.
After Don King and the rest of his crew received their funds, Tyson was probably left with a couple of million. Yes, that’s it. Just a couple of measly millions which 90% of the U.S. would be happy with, but nowhere near enough for a man spending multi millions ever year.
Quick recap:
 |
| photo: Under the Button.com |
Some day, entertainers and athletes will understand that all of their money is not their money. It is very easy to believe all of your money is your money when your contract is posted on every entertainment or sports news website, newsstand, newspaper or magazine article all over the world. The only reality in a salary is TAXES.
According to Bank Rate.com, the 2013 tax bracket for entertainers and athletes making over $450k (k=thousand) is roughly 40%. See chart below:
This is almost half your salary. Some may say, “Wow, that is way too much to pay in taxes”. Others may say, “I would rather make $500k and pay 40% in taxes ($200k in taxes = $300k cash – minus state tax wherever you live) than make the salary I am making on the job I hate.
So far, it seems that a great number of entertainers have not understood that you must pay your taxes in order to stay ahead of the game. Many of us have heard of the popular ones who have fallen to tax issues. According to USA Today.com, some of those celebrities include actor Robert Downey Jr., comedian Sinbad, singer Robin Thicke and more.
Below is one example I would like to discuss where it comes to "All of Your Money Is not Your Money". Boxing legend Mike Tyson has fought in some of the most historic fights in boxing history. From being the youngest champion when he knocked Trevor Berbick back to the future to the Evander Holyfield fiasco with biting his ear.
See Tyson vs. Berbick video from YouTube:
People have constantly tried to figure out how did Mike Tyson go broke. Here is a brief scenario of how it COULD have happened. Not how it happened exactly, but how it COULD have happened.
According to Black Enterprise magazine, Mike Tyson amassed over $300 million in his career. Let’s assume Tyson had 10 fights at $30 million each totaling $300 million. That is $30M per fight at 40% taxes = $12M in taxes alone. Leaving Tyson with $18M in cash minus state taxes where Tyson fought or from taxes at home. Lets say Mike paid 5% in state tax = $1.5M leaving $16.5M. Still a lot of money right? Don't forget, Mike still has to pay the promoter, who at that time was Don King.
 |
| photo: Fan Share.com |
According to Boxing Insider.com, King may have been receiving up to 50% percent as documented by Jack Newfield in his book "Only in America: The Life and Crimes of Don King". Plus Tyson’s boxing manager/corner man and other corner people. Then you have the lackeys who just hang around to get something for nothing.
After Don King and the rest of his crew received their funds, Tyson was probably left with a couple of million. Yes, that’s it. Just a couple of measly millions which 90% of the U.S. would be happy with, but nowhere near enough for a man spending multi millions ever year.
Quick recap:
Earnings & Deductions
|
Percentage
|
Amount
|
Mike Tyson’s per
Fight Purse
|
100%
|
$30M
|
Federal Taxes
|
40%
|
$12M
|
State Taxes
|
5%
|
$1.5M
|
Promoter (Don King)
|
50%
|
$15M
|
Mike Tyson take home
cash
|
5%
|
1.5M
|
According to Luxist.com and Sports Illustrated.CNN.com, Tyson purchased a
$2.7M home in Farmington, Connecticut, which was later sold to rapper 50 Cent
for $4.1M in 2007. He also purchased several other homes across the U.S., a
fleet of vehicles and a Bengal tiger to go along with his lavish spending, according to NBC Chicago.com. One thing is for sure...people can spend on what they want as long as it is in their budget. Athletes and Entertainers need to remember their money is not the gross. It is the profit after all expenses have been deducted.
So you see athletes and
entertainers, All of Your Money is Not Your Money. If you are not careful with
your money, you may end up like so many others who have fallen victim to the
mismanagement of millions. Tyson is just one example of thousands we have seen
over the years.
I hope you all learn from
situations around you and just pray you invest well and have good sound people
in your corner.
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