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The Los Angeles Lakers gave Anthony Davis the richest contract extension in NBA history in terms of annual value, signing him to a three-year, $186 million pact on August 4.
One day later, the fallout from that deal has reach Milwaukee Bucks star Giannis Antetokounmpo. The two-time MVP could not help but question the reported taxes Davis will have to pay on his newfound wealth.
“Who the hell is FICA and Jock,” Antetkounmpo tweeted. “Can they hoop?”
Anyone earning a paycheck in the United States is familiar with FICA, short for Federal Income Contributions Act, which uses a portion of one’s income to fund Medicare (1.45%) and Social Security (6.2%), per the Social Security Administration. But not nearly as many employed people are familiar with the Jock tax as explained by Kelley R. Taylor of Kiplinger:
The jock tax is an income tax levied on athletes and other people associated with sports teams earning money outside their home states. The tax has an interesting history.
- In 1991, following the NBA Finals, California assessed state income taxes against the Chicago Bulls (including Michael Jordan), who played the Los Angeles Lakers in the NBA Finals that year.
- What is Michael Jordan’s Revenge?: Illinois then enacted its law, “Michael Jordan’s Revenge,” to tax players who came to Chicago, and other states followed suit.
- The concept was that athletes and staff who earn income while visiting a state should be subject to income tax in that state. The jock tax continues to be a lucrative source of revenue for states that impose it.
The jock tax is enforced in all but five states – Florida, Nevada, Tennessee, Texas, and Washington – and even some cities (Kansas City, Philadelphia, and Detroit). That means Antetokounmpo is paying on his five-year, $228 million contract too.
This is would good news for the Lakers with Antetokounmpo holding a player option for the 2025-26 season while L.A. is always an attractive destination.
But it is not just that particular tax that is draining Davis’ earnings, as the graphic illustrates.
California Teams Hit Especially Hard by ‘Jock Tax’
California also has the highest state income tax rate in the country, roughly 4.6% higher than the rates in Wisconsin where Antetokounmpo plays half of his games, per Nerdwallet.
Antetokounmpo wasn’t the only NBA star to weigh in, either. Sacramento Kings guard De’Aaron Fox also weighed in on the matter with some experience on the matter having received a four-year, $90 million contract extension in 2020. He also explained how the California teams get hit especially hard by the jock tax.
“9 times out 10 you get the escrow back but still [sick],” Fox tweeted.
“The pick after me actually made more on our rookie contracts because they were in Florida,” Fox said in a subsequent tweet.
Anthony Davis Left Money on the Table
The tax figures would have been even higher had Davis chosen to maximize his earnings and opted out after this coming season.
“If anything, this deal is probably more of a win for the Lakers, wrote Jovan Buha of The Athletic on August 4. “Davis would have been eligible for a five-year contract worth upwards of $304 million (basically the same contract as Jaylen Brown) — adding an extra year and increasing the overall salary committed to him.”
The difference was one year and $70 million for Davis. That may end up being an even bigger win for the Lakers’ front office giving them flexibility with LeBron James still able to opt out of his two-year, $99 million contract after next season.
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