LeBron James has recently earned the title of ‘billionaire’ according to Forbes. He’s the only active player in NBA history to have a net worth of $1 billion as Michael Jordan achieved this feat well into his retirement.
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James has several streams of income. Whether it be his standard NBA contract such as the $97 million two year contract extension he’s on right now or his off court endeavors like his Springhill entertainment company or the various endorsements he has in play.
When players in the league sign large scale contracts, the immediate reaction to them doing so is awe. However, a $150 million contract does not mean that player is receiving ever bit of the $150 million due to an unfortunate thing called tax.
Also read: “20 Years? No Way Without Mike Mancias”: LeBron James Credits Athletic Trainer For Longevity
LeBron James’ taxes compared to Steve Ballmer’s tax
LeBron James reportedly earns $200 million a year as of 2022. However, that isn’t much he takes home towards the end of a year. His is taxed nearly 35% on that $200 million and so he has to pay the United States government about $70,000,000 a year.
Steve Ballmer, who has a net worth of $90 billion, is reported to earn about $1 billion a year. His tax percentage is less than a third of what James’ is at just over 11%. The reason for why a man who is worth 90x more than LeBron has such a low tax percentage is due to amortization.
Billionaire owners pay far less in tax % than their millionaire players (and staff):
: 34.8% on $200m
‘ : 14.1% on $45,000
: 11.6% on $1 billion pic.twitter.com/MkB0tmG9u9
— Andrew Petcash (@AndrewPetcash) April 8, 2023
Amortization is a part of the United States tax code that allows sports team owners to write off the purchasing price of the team they own when it comes to their taxes. This is because buy a team will automatically lead to depreciating assets such as the stadium and the equipment within it. to counteract this, they have been given leniency when it comes to their tax.
Do all NBA owners have the same tax percentage?
Essentially, the more a team was bought for, the more that particular owner can write off when it comes to tax. Michael Jordan will not have a tax percentage as low as Steve Ballmer because he purchased the Charlotte Bobcats for a price lower than that of what the Microsoft shareholder did.
LeBron James has stated that he wants to own an NBA team one day, preferably in a city like Las Vegas. Safe to say that he would benefit greatly from doing so.
