The fiscal cliff finally is intersecting with the NFL.
Lost in the suggestion that the notoriously cap-rich Buccaneers chewed up a few million in current-year cap space (which could have been carried to 2013 anyway) by shifting millions in base salary due and payable to receiver Vincent Jackson and guard Carl Nicks is the reality that Jackson and Nick likely have saved hundreds of thousands in tax dollars by taking the bulk of their 2013 pay in 2012.
Per a source with knowledge of Jackson’s contract, $12.16 million of his 2013 base salary of $13 million has been pushed into 2012, in the form of a guaranteed roster bonus that will be prorated at the rate of $2.432 million per year from 2012 through 2016. Though the move creates plenty of 2013 spending room for a team that has cap problems only when the wind is whipping through St. Petersburg, the adjustment allowed Jackson to pocket $559,936 that otherwise would have gone to the federal government.
That’s the difference between the federal taxes Jackson will pay on the money at a 35-percent rate in 2012 and a looming 39.6-percent burden in 2013.
For Nicks, $11.785 million was shifted to 2012, creating a federal tax savings of $542,110.
The Bucs potentially benefit from this adjustment of payments via potential changes to the payroll tax rate in 2013. But it also creates plenty of goodwill for the players.
Of course, it may not make Uncle Sam very happy. Via those two new contracts, he’s been frozen out of more than $1 million in tax money that he otherwise would have received.
Meanwhile, why aren’t more players doing the same thing? It’s arguably professional malpractice for agents to not at least attempt to take future pay now in order to reduce the future tax burden for their clients, and we wonder whether and to what extent the NFLPA has encouraged restructurings aimed at legitimate tax avoidance.
Uncle Sam says, “Hopefully not at all.”