A Reader's Concern About Jon Rahm's Federal Taxes-- April 10, 2023

Locator: 44357C. 

The Masters: a reader suggested that the winner of the Master's will pay 39% of his winnings in federal taxes.

My thoughts, not ready for prime time:

Federal taxes on Jon Rahm winnings won't even come close to 39% once all his deductions are taken into account.

And if that 39% is too much, then the Masters / PGA should increase his winnings by 39% to offset the tax.

In fact the total purse for the Masters went from $15 million to $18 million in the last year or so.

But if that still isn't enough for Jon Rahm, he could have joined LIV and would have received $100 million for a signing bonus [= 2,500 folks earning $40,000.]

Jon Rahm moved from Spain to Arizona. Arizona's state income tax maxes out at 2.98%. If he were smart, Rahm would move to Texas where there is no state income tax.  

In addition, I assume since the tournament was held in Georgia, he will also pay Georgia state income tax which has a max rate of 5.75%. 

I believe all those state taxes (I could be wrong) are deductions from federal tax. 

Also, unlike those who make $20,000 and have max social security "taxes" taken out of their pay, no social security tax is taken out of earning exceeding $160,200. If Jon Rahm is unhappy with paying taxes, he doesn’t have to enter golf tournaments.

And finally, Jon Rahm can easily make up any taxes paid by making the "right" life decisions, "right" financial decisions, and making the "right" investment decisions.

And unlike Jamie Dimon who could earn upwards of $35 million in compensation this year, Jon Rahm has a limited number of tournaments to play, and he actually has to make the cut in all of those tournaments, and generally place in the top 20, to make any money.

My suggestion: athletes should be paid more and government should increase their take. In fact, there should be an "athletes and entertainers' tax."

From CNBC: and yes, this has more to do with "wealth" than "income."