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‘You're not taxing activity. You're taxing existence.’
For a football player, winning the Super Bowl is the Mount Olympus of athletic dreams. Unless, of course, he wins it in California.
“If you win the Super Bowl in California, then they send you a bill that says, ‘Uh-oh, you lose,’” laughs Glenn Beck.
Since the Super Bowl was hosted in San Francisco, the state of California taxes not just the income the players earned for the game but for all their “duty days.”
But just how much money are we talking?
“This is going to blow your mind,” says Glenn.
Unlike many other states, “California reaches backward months into the past, and they claim the right to tax a slice of your entire season salary based on how many duty days you spent in the state. … So they're not just taxing the bonus; they're not just taxing the game check; they're taxing you the entire year,” he explains.
What does that mean for the Seahawks players, who each received a $178,000 bonus for winning the Super Bowl? It means that they “[owed] the state more than that in taxes,” says Glenn.
“How can you lose money winning the Super Bowl? Well, California's found a way to do it,” he scoffs.
California implements what is called a “jock tax,” which is the harshest nonresident income tax scheme on visiting athletes.
“In California, they're giving you the highest marginal rate in the country. It's over 13%, and they're thinking about raising it,” says Glenn.
“When a government decides it can tax income earned elsewhere just because you happen to pass through, you're not taxing activity; you're taxing existence. That doesn't work out well,” he warns.
In the 1970s, Richard Cloward and Frances Piven — two “crazy Marxist professors,” says Glenn — “collapsed New York [City]” when they intentionally overloaded the U.S. welfare system by mass-enrolling eligible people in benefits, aiming to force a crisis that would lead to major reforms.
“They had high taxes, aggressive enforcement — ‘you owe us because you were here.’ What followed in the 1970s?” asks Glenn. “Capital flight.”
“Why do you think Rush Limbaugh left? Why do you think Sean Hannity left? Why do you think I left?”
France has a similar story in its history books. In the 1980s, the nation imposed a hefty “wealth tax,” spurring a historic exodus of the nation’s richest people.
“The wealthy didn't pay more. They left. And by the time the [French] government repealed the tax, tens of billions of dollars in capital already [were] gone, along with all the jobs and the investment that came with it,” says Glenn.
Ancient Rome is yet another example.
“In Rome — late empire — they took productive citizens and just squeezed them,” says Glenn. “Why? Because ... they were bloating the state. They needed to pay for the giant state. Tax base completely collapsed. Economy followed — gone.”
“There is a lesson in every civilization that has tried this. … You cannot tax people into staying. You can only tax them into leaving.”
But will California heed history’s warnings? It’s not looking promising for the Golden State.
“Six straight years of net population loss [in California]. ... Hundreds of major companies are gone. Film production is a thing of the past. Billionaires are moving their residence. Where? To Florida,” says Glenn.
But “instead of asking the question what's happening here, they just answer the same way: just tax what's left.”
“That's the danger of the 'jock tax' mentality,” says Glenn, “because once you accept the idea that location alone gives the government the right to reach into your entire life, there is no limiting principle any more.”
To hear more, watch the video above.
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BlazeTV Staff