There really is a Laffer Curve you know

\”I wouldn\’t be optimistic about seeing Bolt compete on British soil this year and there is a strong chance he won\’t be back until 2012,\” said an insider close to the negotiations with the Jamaican.

Since April, foreign sports stars competing in Britain are liable for a top rate of income tax of 50 per cent but, controversially, the tax is charged not just on the money they earn in Britain but on a proportion of their worldwide sponsorship income.

Under the old rules, athletes\’ tax bills were based on how many days they competed in Britain, so if they competed in the country for one week, they would be charged one 52nd of their endorsement earnings.

Now, HM Revenue & Customs bases its charge on what proportion of an athlete\’s competitions take place in Britain. An athlete competing in 10 events globally with one of them held in Britain could be charged one 10th of his worldwide earnings at a top rate of 50 per cent.

In the case of Bolt, that would mean a potentially colossal tax bill that could outweigh any prize money or appearance fee he earns from racing in Britain.

Sports chiefs have warned that foreign stars across a range of sports could snub Britain because of the harsh tax regime.

Spanish golfer Sergio Garcia has scaled back his British appearances to just the Open Championship for tax reasons, while the new rule on overseas stars were cited by Uefa president Michel Platini as a key reason why Wembley missed out on hosting this year\’s Champions League final.

\’Nuff said really.

8 thoughts on “There really is a Laffer Curve you know”

  1. I wonder how Ritchie will deal with this. By ignoring it completely I’d imagine but you never know.

    Tim adds: Amusingly, he has in fact mentioned this sort of thing. That people don’t decide to live or work in a country on the basis of tax rates. Also, on how appalling it is that things like the World Cup and the Olympics don’t pay (and nor do the competitors) domestic taxes. You’ll note that Bolt will indeed come for the Olympics when he won’t be subject to these taxes…..

  2. Bolt the sprinter is as well named as those Liverpool forwards of years ago, Rush and Speedie. Come to think of it, the laffer curve is pretty well named, since it is quite a hoot.

  3. “worldwide earnings”, snigger.

    Just another one of those things that has completely bollocked up the tax system, just like the Robin Hood Tax, it only works when every country complies, which in this nasty non-socialist free market world, they don’t.

  4. > it only works when every country complies,
    > which in this nasty non-socialist free market
    > world, they don’t.

    By the way, remarkably: when countries trade with each other – even socialist countries – they tend to trade based on free market rules, not central planning and agreement. Unless there is one party to the trade that can physically apply superior violence over everyone else, as was the case with Soviet Union and SEV, which indeed did have a sort of central planning.

    So, when one partner cannot control the others, the result is a market, even if both partners are socialist. Like e.g. after the honeymoon period, PR China and USSR did their trade on a market basis.

    The market may of course use other forms of payment besides hard currency; e.g. the bilateral trade between Finland and USSR until 1990 when it was all about “friendship”… and purchasing political influence, and playing a game with it, and trying to expand a sphere of influence.

  5. Another strike of genius from Mr Brown.

    Did they really think that highly paid sports stars would not notice?

  6. “Another strike of genius from Mr Brown.”

    Brown has an almost infinite list of sins, tis true. But you can’t pin this one on him: the relevant legislation dates from 1988.

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