Thread by @propublica

Let’s play a game.

Match these people…

💰 Steve Ballmer
@LAClippers owner

🏀 Lebron James
@KingJames

🥨 Adelaide Avila
stadium worker

...to their real 2018 federal income tax rates:

💸 14.1%

💸 12 %

💸 35.9%

@LAClippers @KingJames If you haven’t read our new IRS report, chances are you’ll answer this incorrectly…

(spoiler: this isn’t a very fun game)

But here’s a hint:

The tax rates for team owners are so low, in part, because the tax code allows them to write off almost the entire purchase price of their teams.

This is called “amortization.”

The underlying logic is that the purchase price of businesses include assets that degrade in value over time, like:

-Buildings
-Equipment
-Patents, etc

But the thing about professional sports is….

...the teams’ most valuable assets, like TV deals and player contracts, are almost guaranteed to regenerate b/c sports franchises are basically monopolies.

There’s little risk that players will stop playing for Ballmer’s Clippers or that TV stations will stop airing their games.

Nonetheless, team owners get to amortize, or write off, those assets, even as they actually rise in value.

“Amortization” allows team owners to transform real-world profits into losses **just** for tax purposes.

This allows them to avoid taxes not just on team profits, but also on income from other ventures.

Who does this, you ask?

Owners across the @NFL, @NBA, @NHL and @MLB use their teams to lower their tax rates.
propub.li/3dTf2nR

For example:

And:

💰 @TonyKhan made use of at least $79 million in “losses” from a stake in the Jacksonville @Jaguars…

💰 Leonard Wilf, who owns the Minnesota @Vikings w/ family members, has taken $66 million in losses from his minority stake.

(A Khan representative said “we simply and fully comply” with all IRS rules; Wilf did not respond to questions.)

So. These “losses” allow owners to dramatically reduce their personal tax bills, we found.

💰 @steven_Ballmer has saved about $140M in taxes b/c of the @clippers and its players.

💰 @BillFoleyHockey, owner of the Vegas @GoldenKnights, has saved >$12M over two years.

(The chief legal officer for the @GoldenKnights didn’t respond to tax questions but noted that one revenue stream was used “to pay rent, to employ hundreds of people, provide outstanding entertainment and create a source of pride for our community.”)

But back to @steven_ballmer, @kingjames and Ms. Avila, who works in the concession stand at @STAPLESCenter...

🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁🥁💥

Real 2018 federal income tax rates:

Lebron James…………….🏀 35.9%
@kingjames

Adelaide Avila…………... 🥨 14.1%
stadium employee

Steve Ballmer……………....💰 12%
@LAClippers owner

propub.li/3dTf2nR

(A Ballmer spokesperson told ProPublica that he “has always paid the taxes he owes, and has publicly noted that he would personally be fine with paying more.”)

Story takeaways here:

propub.li/3AHNnjF

This is just the latest tactic exposed by @ProPublica’s Secret IRS Files that the wealthy use to avoid (legally) paying their fair share of taxes.

Want to get notified when the next secret IRS file drops? We have options for you:

Via email…
propub.li/3jTkHy5

Or text “IRS” to 917-746-1447 (standard messaging rates apply) to get notified the minute our next report publishes.

Lastly: we need your help.

Do you have expertise in tax law, accounting or wealth management?

Get in touch 👇

projects.propublica.org/tips/help-us-r…