A weekly newsletter for people who want to understand money without needing therapy afterward. I cover accounting, tax, and finance the way they should be taught. Simple, sharp, and with a sense of humor. If knowledge is power, this one’s your caffeine shot.
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Seahawks lose money winning the superbowl, housing flat
Published 5 months ago • 6 min read
Romeo Razi, CPA
Feb 14th
😶Seahawks win the Superbowl, California wins their wallets.
Seahawks were poppin' bottles🍾 after winning the Superbowl. But it didn't take long for the champagne to go flat. That's because the State of California came to take their cut.
Here's how it works: each player got a $178K bonus 💸for winning the Superbowl. Now here comes the knife🔪: the state of California says, "Yo baller, congrats, congrats! You da man. Now pay us for making that money in Cali." But here's the catch: It's not just the bonus. Any training days (called Duty days) you spent in California to leading up to the Superbowl are also taxed (from your regular NFL salary).
So, they didn't just want the bonus, they wanted a part of their normal salary. The Seahawks spent about 7-10 duty days in California. Net effect: the players lost money winning the Superbowl in California (e.g. Sam Darnold is estimated to owe California $200K+, which is more than his bonus).
Here's how the infamous "Jock Tax" Works:
🧮 Not just the bonus, your normal salary is "apportioned" ↳ "Apportioned" = fancy tax language by states to take your money! ↳ California taxes a slice of your income, not just game-day pay. ↳ Formula: (duty days in CA / total duty days) × Annual salary × 13.3%.
💰 The $178K bonus? Just the beginning ↳ A player earning $5M annually with duty days in California will owe. ↳ The bonus becomes persona non-grata, because the normal salary gets included.
🏈 Every state with income tax plays this game ↳ Pro athlete play a sport in 10 different states? File 10 state tax returns. ↳ Florida and Texas have zero state tax. Miami and Dallas players looking like Einstein.
⚖️ It started with Michael Jordan ↳ After the Bulls won in LA in 1991, California sent MJ a tax bill. ↳ Illinois retaliated with "Michael Jordan's Revenge", taxing visiting California athletes. ↳ Now almost every state with a pro team has its own jock tax. ↳ Once again: California ruins it for everyone.
Trending: people are leaving the Golden State
The tax situation in California has gotten so bad, the Cali Tax Exodus is now in full effect:
People who have left the building:
Google Co-founders, have moved to Florida
Mark Zuckerberg, just bought a mansion in Florida
David Sacks (venture guy), moved to Texas
Larry Ellison (oracle), now lives in Nevada (Lake Tahoe)
They are all moving to non-tax states.
Hey Cali, I got a message for you: "we love you but weren't no longer in love with you." And honestly, can you blame anyone for leaving?
🏡Housing is melting
Unless you live in a hyper-niche market, seller are de-lulu.
Romeo, why is this happening?
Because sellers are acting like it's 2021.
The raw truth: people bought homes for $400K, Zillow told them it was worth $800K, and the reality is that the home is worth $675K (maybe)📉.
And if you still have a 2.5%-3.0% mortgage, that's not debt.
It's an artifact you found in a garage sale🏺 (and nobody is giving that up, unless they're desperate or going through a divorce).
Is housing out?
The days of buying average single-family homes, as rentals, for cashflow are over!
Numbers just don't pencil anymore: ↳💸Rent doesn't cover debt payments, ↳📈Insurance is through the roof, ↳🧾Property taxes are going up, ↳🚪States like California are add new exit taxes to selling real estate.
Even Graham Stephan, the poster child of the “buy, rent, repeat” crowd, is unloading his rentals. When the guy who made a career telling you to buy single-family homes starts selling them, that’s not noise. That’s a signal 🚨.
Will it be like this forever?
Of course not. Nothing in markets is permanent except for hubris. But I don't see the trend changing, for the next few years. Don't get me wrong, if you find a place you love, and are planning to stay in that home for the next 7-10 years and send your kids to the school down the street, because it's in a good school district, there is a case to buy the property (i.e., you're making a life decision, not a spreadsheet decision.)
But if you're looking straight investment, I wouldn't hold my breath.
🏠 Housing Corner
Check out what's happened here:
For the first time ever, the number of 6%+ mortgages is more than 3% mortgages. And the spread is only going to get wider from here.
The rest of housing corner:
💹
Interest Rates
6.87%
🏡 🏡 🏡 Inventory
844,011
🧊
Days on Market
63 days
Here's a quick list of the housing stats over the last 1 weeks: 🏠 Mortgage rates: 6.87% (up a few bps) 📈 Inventory: 844,011 homes (up sellers, less buyers) 📉 Price reductions? 39.57% (more people lowering their prices) 💰 Median list price? $449,900 (same) 🕰️ Median days on market? 63 (longer on the market).
Market Highlights
Tech and S&P are up
~ S&P 500 $7,515 (+0.72%)
~ Nasdaq $25,873 (+0.61%)
BTC, Gold, & Silver still buggin'
~ Gold $4,009 (-2.44%)
~ BTC $61,982 (-1.17%)
~ Silver $57.98 (-3.51%)
🚨Upcoming Tax Deadlines you should be aware of: 🗓July
July 31st - 5500 Pension Tax Returns Due.
Your 401k company handles that, unless you have a solo 401k
🗓Aug
Nothing. You cool.
🗓Sept
Sept. 15th - 3rd Quarter Estimated Tax Due
Sept 15th - S-Corporation and LLC partnership Tax Returns Due
What's been going on with your Favorite CPA
As you can imagine, this time of year, I'm very busy.
So, for the next couple months you will see newsletters coming out every few weeks instead of weekly. But I do want to leave you will a beautiful Valentines Day Quote:
Valentine's Day Quote:
"If he loves you, for Valentines Day, he'll give you a tax refund." -Tax Lothario ❤️
A weekly newsletter for people who want to understand money without needing therapy afterward. I cover accounting, tax, and finance the way they should be taught. Simple, sharp, and with a sense of humor. If knowledge is power, this one’s your caffeine shot.
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