On Super Sunday

In case you didn’t notice from all the political “news,”  Super Bowl 50 is today.
Football as a sport is simultaneously unparalleled in popularity and embattled. David French writes:

I grew up in the kind of eighborhood where I could walk with my football to the n field near my house, kick the ball around a few times, and — within minutes — my friends would be pouring out of their homes ready to play for hours on end. Those were some of the greatest times of my life. On that field, a skinny, nerdy kid who was more comfortable with graph paper and 12- and 20-sided dice could learn how to take a hit and — just as important — how to deliver one. I gained confidence, I was humbled (more than once), and I fell in love with America’s new athletic pastime. 

However, there are some on the left who want to deny kids those kinds of days, to turn America against its favorite sport. To them, football is just too male, too martial, and too darn American. They’ve argued that football breeds disrespect for women, that it’s too violent, and that its culture is too religious. Yet none of those criticisms have made an impact. People kept watching football, and — crucially — they kept letting their kids run outside, join the games in the field or at school, and level their friends on the crossing route.

But now there’s a new attack — one that precisely tracks the timid tenor of our times. Sure we knew football was violent, but now we know it’s dangerous — so dangerous that it’s immoral to watch.

And, yes, it is modestly dangerous. Kids who play football tend to get injured more than kids who player other sports, and — yes — they have a greater likelihood of suffering from concussions. Repeated concussions can and do cause brain damage, and for those who play football for a living, there are sad stories of retired NFL players who have suffered severe and even deadly damage to body and mind.

    When children are denied the opportunity to take risks, they often approach the world with a fear and timidity that can haunt them for life.

This is the worst possible news for today’s parents, who often seek above all to guarantee the physical and psychological safety of their children. Children are being raised as if they’re fragile, in need of constant protection. For these (often upper-middle-class) parents, new information about football’s dangers makes their decision easy. Johnny can play basketball or soccer, but he can’t play football. Indeed, in just one year’s time, the percentage of Americans who said they wouldn’t let their children play football jumped nine points, from 22 percent to 31 percent.

Yet this mindset advances the great error of modern parenting — the belief that we should protect our kids from as much harm as we can. This short-sighted, fearful attitude ultimately damages the very children we so desperately safeguard. By taking risks, children learn other virtues, and when children are denied the opportunity to take risks, they often approach the world with a fear and timidity that can haunt them for life. What if my parents had kept me from the field near our house, protecting me from those many blows — endured without a helmet or shoulder pads or protection of any kind? Would I be the same person that I am today? Or would I perhaps be a bit more fearful, uncertain of my own physical courage and toughness?

Football, moreover, channels natural and desirable male risk-taking and aggression into a game bound by rules and governed by a code of conduct. In football, as in many sports, you learn self-sacrifice, including how to deny yourself and risk yourself for the benefit of your teammates. One doesn’t have to play football to learn those lessons, and playing football is not necessary to turn boys into young men, but the fear that motivates parents to reject football can indeed keep boys from growing into men.

    To deny a young man the opportunity to test himself is to deny and diminish his very essence.

Since the dawn of time, boys have courted danger and tested the limits of their own endurance. To deny a young man the opportunity to test himself is to deny and diminish his very essence. Not all young men are aggressive, but young men with aggressive instincts will attempt to find outlets for their innate sense of adventure. This puts them in direct conflict with the fearful spirit of the age. Parents, schools, and maternalistic government officials who try to deny those outlets or strip the masculine aggression and valor from boys do far more harm than good. They crush the spirits of the young men they seek to protect.

When I watch the NFL, I don’t see victims. I see men who have known their entire lives that football can be dangerous. These men have injuries, and they’ve suffered their own pain, but they play on. They do it for the thrill of competition, for the love of their teammates, and — yes — for the fame and money their athletic prowess provides. At the end of the day, however, the courage they show on the football field is central to their very identity. Long before there were stadiums full of cheering fans, each one of those players pursued his own lonely, self-sacrificial quest for greatness. It is not immoral to applaud their achievements, to appreciate their sacrifice, and to enjoy the sheer spectacle of the sport they love.

Every football player, when he steps onto the gridiron, demonstrates a degree of bravery that directly rebukes our increasingly bubble-wrapped culture. Our nation needs bravery far more than it needs safety, but in the cultural struggles ahead I believe that fear may prevail. And if fear does prevail, it will do more than destroy a great sport, it will rip the valor and purpose right out of the hearts of men.

The winners of Super Bowl 50 today will, not surprisingly, pay a lot of taxes, about which Dan Mitchell writes:

Imagine a taxpayer who earns $50,000 and pays $10,000 in tax.

With that information, we know the taxpayer’s average tax rate is 20 percent. But this information tells us nothing about incentives to earn more income because we don’t know the marginal tax rate that would apply if the taxpayer was more productive and earned another $5,000.

Consider these three simple scenarios with wildly different marginal tax rates.

    The tax system imposes a $10,000 annual charge on all taxpayers (sometimes referred to as a “head tax”). Under this system, our taxpayer pays that tax, which means the average tax rate on $50,000 of income is 20 percent. But the marginal tax rate would be zero on the additional $5,000 of income. In this system, the tax system does not discourage additional economic activity.
    The tax system imposes a flat rate of 20 percent on every dollar of income. Under this system, our taxpayer pays that tax on every dollar of income, which means the average tax rate on $50,000 of income is 20 percent. And the marginal tax rate would also be 20 percent on the additional $5,000 of income. In this system, the tax system imposes a modest penalty on additional economic activity.
    The tax system has a $40,000 personal exemption and then a 100 percent tax rate on all income about that level. Under this system, our taxpayer pays $10,000 of tax on $50,000 of income, which means an average tax rate of 20 percent. But the marginal tax rate on another $5,000 of income would be 100 percent. In this system, the tax system would destroy incentives for any additional economic activity.

These examples are very simplified, of course, but they accurately show how systems with identical average tax rates can have very different marginal tax rates. And from an economic perspective, it’s the marginal tax rate that matters.

Remember, economic growth only occurs if people decide to increase the quantity and/or quality of labor and capital they provide to the economy. And those decisions obviously are influenced by marginal tax rates rather than average tax rates.

This is why President Obama’s class-warfare tax policies are so destructive. This is why America’s punitive corporate tax system is so anti-competitive, even if the average tax rate on companies is sometimes relatively low.

And this is why economists seem fixated on lowering top tax rates. It’s not that we lose any sleep about the average tax rate of successful people. We just don’t want to discourage highly productive investors, entrepreneurs, and small business owners from doing things that result in more growth and prosperity for the rest of us.

We’d rather have the benign tax system of Hong Kong instead of the punitive tax system of France. Now let’s look at a real-world (though very unusual) example.

Writing for Forbes, a Certified Public Accountant explains why Cam Newton of the Carolina Panthers is guaranteed to lose the Super Bowl.

Not on the playing field. The defeat will occur when he files his taxes.

    Remember when Peyton Manning paid New Jersey nearly $47,000 in taxes two years ago on his Super Bowl earnings of $46,000? …Newton is looking at a tax bill more than twice as much, which will swallow up his entire Super Bowl paycheck, win or lose, thanks to California’s tops-in-the-nation tax rate of 13.3%.

You may be wondering why California is going to pillage Cam Newton since he plays for a team from North Carolina, but there is a legitimate “nexus” for tax since the Super Bowl is being playing in California.

But it’s the level of the tax and marginal impact that matters. More specifically, the tax-addicted California politicians impose taxes on out-of-state athletes based on how many days they spend in the Golden State.

    Before we get into the numbers, let’s do a quick review of the jock tax rules… States tax a player based on their calendar-year income. They apply a duty day calculation which takes the ratio of duty days within the state over total duty days for the year.

Now let’s look at the tax implication for Cam Newton.

    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… To determine what Newton will pay California on his Super Bowl winnings alone, …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.

So what’s Cam’s marginal tax rate?

    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.

In other words, Cam Newton will pay a Barack Obama-style flat tax. The rules are very simple. The government simply takes all your money.

Or, in this case, more than all your money. So it’s akin to a French-style flat tax.

Some of you may be thinking this analysis is unfair because California isn’t imposing a 99.6 percent or 198.8 percent tax on his Super Bowl earnings. Instead, the state is taxing his entire annual income based on the number of days he’s working in the state.

But that’s not the economically relevant issue. What matters if that he’ll be paying about $101,000 of extra tax simply because the game takes place in California.

However, if the Super Bowl was in a city like Dallas and Miami, there would be no additional tax.

The good news, so to speak, is that Cam Newton has a contract that would prevent him from staying home and skipping the game. So he basically doesn’t have the ability to respond to the confiscatory tax rate.

Many successful taxpayers, by contrast, do have flexibility and they are the job creators and investors who help decide whether states grow faster and stagnate. So while California will have the ability to pillage Cam Newton, the state is basically following a suicidal fiscal policy.

Basically the France of America. And that’s the high cost of high marginal tax rates.

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