Manny Pacquiao takes on his toughest opponent in his next fight: the Internal Revenue Service. Roy Jones, Evander Holyfield, and Floyd Mayweather all fought the most powerful three-letters in boxing and lost. Manny Pacquiao, a Filipino who doesn’t possess their home field disadvantage, has already defeated the IRS without stepping through the ropes.
Pacquiao has boxed his last fourteen matches in the United States, where he earned more than $200 million beating the likes of Oscar De la Hoya, Ricky Hatton, Juan Manuel Marquez, Marco Antonio Barrera, Erik Morales, Miguel Cotto, and Shane Mosley -- all can’t-miss Hall of Famers. Nevada and Texas, two of the few states without an income tax, tellingly hosted all fourteen of those fights. But this time around, the tax man, and the American working stiffs working in hotels, casinos, and the arena, will miss out on their cut.
But the welterweight gets to keep a much larger percentage of his purse. In doing so, the Pac Man may be the first boxer to defeat the Tax Man. More amazingly, he may be the first tax refugee to flee the “land of the free” for China. Should he earn $20 million for his fall fight against Brandon Rios, the government in Macau will gobble up $2.5 million of it. Had he opted for Las Vegas, Uncle Sam would have seized $8 million.
One needn’t be a math whiz -- and most boxers aren’t -- to grasp that $17.5 million is greater than $12 million. Pacquiao’s financial advisor Michael Koncz explained earlier this year that “the 39.6 percent tax rate Pacquiao would face if he were to fight again in the U.S. makes a fall bout in Las Vegas ‘a no go.’” So, Manny not only gets to stay closer to home in Asia, he gets to keep more of the money he earned, as well.
Other fighters taking on the IRS haven’t fared as well.
Sugar Ray Robinson earned Ring Magazine’s “fighter of the year” accolade in 1942. So what was he doing fighting Joey Archer in 1965? After Robinson’s 1956 Wrigley Field fight with Bobo Olson, the tax man came for $90,000 of his $150,000 purse. The IRS garnished $23,000 of the $67,000 awarded to him in his successful rematch against Gene Fullmer in 1957. The flamboyant boxer put businesses in his mother’s name and hid money in his wife’s accounts to stave off his pursuers. Ray Robinson fought as a fortysomething shadow of himself because the taxman relentlessly shadowed him.
In the process of taking Robinson’s money, the IRS took his mind. “He didn’t even remember me,” Gene Fullmer lamented of his brain-damaged foe at the end. “But they all remembered him.”
Joe Louis regarded Sugar Ray Robinson as “the greatest fighter I ever saw.” The pair that shared pugilistic skills inside the ring shared similar troubles outside of it. The IRS hectored Louis for more than a decade. “Momma left a little estate to be divided with the family,” Joe Louis confessed in his autobiography. “My share was about $660. The tax people took it.” After grabbing the bequest from his mom, the IRS confiscated the money Louis had set aside for his own children. “Losing my kids’ money hurt me a lot.”
The predicament humbled Louis in a way that no other opponent could. He went on game shows. After winning $30,000 on High Finance, the IRS grabbed $25,000 of it. At Moulin Rouge in the fifties and at Caesar’s Palace in the seventies, Las Vegas gamblers experienced surrealistic encounters with the former heavyweight champion, employed as a greeter by the casinos. Louis even served as the third man in the ring for the 1974 Joe Frazier-Jerry Quarry rematch, a spectacle so jarring that it still causes ESPN Classic viewers to fall out of their chairs in disbelief. His forays into professional wrestling proved too much for his wife, who likened it to seeing President Eisenhower washing dishes. The same government that benefitted from the sergeant’s many boxing exhibitions for the Army Relief Fund during World War II relieved him of his money -- and his dignity.
It’s perhaps such cautionary tales that make Manny Pacquiao fear feeding the insatiable IRS. Doing so inspires its agents to come back for seconds, and thirds, and so on. And therein lies a cautionary tale for tax-hike enthusiasts. Raising rates prompts moneymakers to take their talents where the rates aren’t so great. The irony of government greed is that it leaves the government with less green.
A flight of human capital from the U.S. to, of all places, China should be enough to make taxpayers cry “no mas.” Too bad there’s no referee to stop the beat down.
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