For the first time in my life, I enjoyed reading a story about soccer. But not because of the sport, but rather because it is very amusing to read about the exodus of top-flight players from England’s Premier League as they escape Prime Minister Brown’s spiteful increase in the top tax rate. The Weekly Standard has the amusing details:
Supply-Side Economics 1 – Gordon Brown’s Class-Warfare Tax Policy 0
September 4, 2009 by Dan Mitchell
The English Premier League has dominated European soccer in recent years. Nine of the last 12 Champions League semifinalists have come from the Premier League, and an English team has been in the final for each of the last five years (two played each other for the trophy in 2008). The Premiership’s top teams–Manchester United, -Arsenal, Chelsea, and Liverpool–are four of the sport’s ten glamour franchises, and the league is easily soccer’s richest. Yet over the last few months, star players have been rejecting offers from the Premier League hand over fist. …Why have players been rejecting hefty fees to play in the world’s most celebrated soccer league? It’s all Gordon Brown’s fault. In April, the British government passed a measure that increases Britain’s top tax rate from 40 percent to 50 percent. The enormous hike applies not just to wealthy soccer stars (the average base salary for a Premier League player is £1.1 million a year) but to anyone making over £150,000. When the tax increase first passed Arsenal striker Andrei Arshavin demanded that the team renegotiate his contract, calling the hike an “unpleasant surprise.” Ronaldo’s agent noted that it would mean an extra £670,000 a year in taxes for the star (who was then still with Manchester United). Arsène Wenger, the manager of Arsenal, matter-of-factly explained that the higher taxes would decimate British professional soccer. “[W]ith the new taxation system, with the collapse of sterling, the domination of the Premier League on that front will go,” Wenger told the Times of London. “That is for sure.” The move is part of Brown’s effort to soak the rich in order to make up for revenues lost in the recession. Three-hundred thousand Britons will be affected by the increase, which is expected to raise an extra £2.1 billion. Which hardly seems worth the bother, because Brown’s plan also involves borrowing some £600 billion over the next five years and bringing Britain’s public debt to 79 percent of GDP by 2013. The result is that Britain’s tax rate is now the highest in the professional soccer world. In Italy, players pay 43 percent on income. In Germany, 45 percent. In France, 40 percent. In Russia, only 13 percent. But the real winner is Spain. Spain’s top tax rate is 43 percent. In 2005, however, Spain amended the law to include a provision for high-earning “foreign executives,” which would require them to pay only 24 percent. …Deloitte Sports Business Group estimates that between the falling pound, the higher British tax rate, and the Spanish tax break, U.K. clubs would have to pay 70 percent more in order to match a player’s take-home pay in Spain. Predictably, no one is happy with the situation. British papers are full of stories lamenting the demise of the Premier League. Also predictably, Britons seem more outraged by Spain’s lower tax rate than by the increase in their own. …the purveyors of goo-goo pan-Europeanism have been affronted, too. Michel Platini, president of the Union of European Football Associations, claimed that there was something “abnormal” about the influx of talent to the Spanish league. “These transfers are a serious challenge to the idea of fair play and the concept of financial balance in our competitions,” Platini told reporters.