The majority of American sports leagues limit what they pay their players. The NFL, NHL, and MLS have “hard caps” that teams cannot go over, while the NBA’s “soft cap” penalizes teams that exceed it.
Major League Baseball doesn’t have a salary cap, which is why we see such obscene payrolls in baseball. The Los Angeles Dodgers, for example, had a total payroll of $260 million in 2022, which means they spent more money on their 40-player roster this year than the entire state of Vermont did on special-education ($213 million).
Freddie Freeman received a team-high $27 million from the Dogers in 2022.
Even with its hard cap, the NFL had a total payroll of about $6 billion. To put that in relative terms, the NFL’s payroll was higher than or comparable to the 2021 annual spending of four states: Delaware; South Dakota; Vermont; and New Hampshire. There are 1,696 players in the NFL; 1.3 million people live in New Hampshire.
Of course, if NFL owners are spending that much money on players, how much more must they be making on the backs of those players?
The most profitable team in the NFL, the Dallas Cowboys, have an operating income of over $280 million. They’re also the most valuable team at $8 billion. If Jerry Jones, the Cowboys owner, sold today, he would be able support the entire state of Delaware and still have about $4 billion left over to open the “Whites Only” high-school of his youthful dreams.
Salary caps in sports are intended to ensure parity across the league. No offense against Green Bay, Wisconsin, but without a salary cap, there’s no way a city of just over 100,000 people could generate enough revenue to compete for players against bigger markets such as Los Angeles, New York City, Philadelphia, or Chicago. Thankfully, as a result of the salary cap, no one can predict what will happen on any given Sunday and a small city like Green Bay can afford the highest paid player in the NFL.
There’s Rich. Then There’s Unfathomably Rich.
But let’s go back to Jerry Jones. According to Bloomberg, the Cowboy’s owner was worth roughly $11.5 billion in Dec. 2022. That’s a $2.5 billion dollar increase from a year earlier. Mr. Jones’ income in 2022 was more than 165,271 times the median U.S. household income.
According to Forbes, Mr. Jones isn’t even in the top 40 richest people in America.
Elon Musk lost more money per minute in 2022 than nearly three median American households earn in a year.
Elon Musk, the richest person in the United States according to Bloomberg, lost $107 billion in 2022 (he actually lost $4 billion just in the hours it took me to write this article!).
Don’t feel too bad for him though; Mr. Musk is still doing fine with a valuation of $164 billion (as of this moment, anyway).
If we try to put Mr. Musk’s loss in more relatively down-to-earth terms, his wealth decreased $203,442 per minute, every minute, this year. His minute-by-minute loss was almost 300% of the median U.S. household income — in other words, Mr. Musk lost more money every minute than the combined yearly income of nearly three median American households.
Guatam Adani, the third-richest person on Earth, had the highest year-to-date change in 2022 when he increased his fortunes by $48.7 billion. Mr. Adani owns the largest port operator in India, as well as the largest closely-held thermal coal producer and largest coal trader. His yearly increase was over a million times greater than the median U.S. household income.
Mr. Adani is an Indian industrialist, however, so we should compare his income to his fellow citizens, the median of whom makes less than US $3,400 a year.
Compared to his countrymen, Guatam Adani made 14 million times what the median Indian household made in 2022.
“Every Billionaire Is a Policy Failure.”
These numbers make no sense. I don’t care what Mr. Adani or Mr. Musk bring to the table, they are not (as individuals) worthy of their wealth. As Representative Ocasio-Cortez (D-NY) has argued, every billionaire is a policy failure.
Rep. Ocasio-Cortez tried to address that failure by proposing (in the press, not in the Congress) a 70% marginal tax rate on incomes above $10 million. Millionaires would send the feds ¢70 of every dollar they earn above $10 million (while still paying 10% on their first $19,400; 12% between $19,401 and $78,950, etc., all the way up through the various tax brackets).
No one ever makes a billion dollars. You take a billion dollars.
Rep. Ocasio-Cortez, 2020
If Mr. Adani paid taxes in the United States under Rep. Ocasio-Cortez’s plan, he would still have taken home roughly $14 billion of the $48 billion he made this year. That’s more than the state budgets of Vermont, South Dakota, and Wyoming combined.
The $34 billion the government received from this one individual could cover the expenditures of 20 different states.
Mr. Musk complained of having to pay the world’s largest tax bill in 2021 when he (reportedly) sent the federal government $11 billion.
I’m all for the richest man in America paying the highest tax bill ever, but like those sports-team owners carrying those obscene payrolls — if that’s what he paid taxes, how much richer must he actually be?
A 70% Tax Rate Isn’t Enough
I’m a fan of Rep. Ocasio-Cortez, but I don’t agree with a 70% marginal tax rate. It institutes a soft cap. The nation needs a hard cap.
Between the day the U.S. formally entered a lockdown (March 18, 2020) and the day the U.S. passed one million deaths due to COVID-19 (May 4, 2022), U.S. billionaires increased their worth (as a group) by $1.71 trillion.
Seriously: you can’t even imagine a trillion.
In June 2022, the left-leaning (but factual) Institute for Policy Studies reported that the wage gap between CEOs and median US workers jumped to 670-to-1 (49 of the 300 firms they studied had ratios of over 1,000-to-1). For every $1 a median worker made, a CEO brought home upwards of $670. Only six of the firms studied had pay gaps of less than 100-to-1.
In another report, the Institute demonstrated how several states (and countries) actually have laws on the books to help these billionaires “avoid federal taxation, cheating the U.S. out of revenue with which it could combat poverty or invest in infrastructure.”
More than half of the states mentioned in the report have regressive tax policies, cutting taxes on the wealthy and forcing the poor to pay taxes on a disproportionate share of their income. The poorest 20% of households in South Dakota, for example, pay about 11.2% of their income in taxes, while the top 1% of South Dakotans paid about 2.5%.
The richest of the rich not only have more money than they need but actively conspire to keep what they have despite what our democratic republic requires of them.
These selfish assholes don’t deserve to keep the 30% that Rep. Ocasio-Cortez allows them.
Tax Incomes Over $1 million by 70% & Over $10 million by 100%
There’s no reason to allow billionaires to exist. Hell, there’s barely a reason to allow millionaires to exist. If an individual can’t satisfy their needs and wants on $1 million a year, then those needs and wants are probably immoral.
I’m willing to grant that a million dollar limit is a radical suggestion in capitalist America, so I’ll judiciously allow our top earners a maximum income of $10 million a year. They’ll just have to send ¢70 of every dollar over $1 million to the feds, and once they hit $10 million, every extra $1 is now ours.
If the US implemented such a drastic (but reasonable) policy, it would be normal to wonder what would happen to the country’s revenues. They wouldn’t include, for example, an $11 billion check from Mr. Musk.
But you also have to wonder how it would affect the country’s outlays. 40% of the 300 firms studied by the Institute for Policy Studies received federal contracts in 2021 totalling over $30 billion. Some of that $30 billion went to the outlandish salaries and bonuses of those firms executives.
A National Salary Cap Spreads the Wealth
Just like in the professional sports leagues, the intent of a national salary cap is to spread the wealth.
According to Salary.com, Walmart Inc.’s CEO made over $21 million in 2021, its CEO of Sam’s Club made over $12 million, and both its CEO of Walmart US and its Global CTO made over $11 million each. Its median (median!) employee pay, however, was only $20,942; half of all of its workers made less than that. Walmart’s CEO made $1,078 for every $1 its median (median!) worker made.
Walmart paid its CEO $1,150 for every $1 it paid to the bottom 10% of its associates.
If $11 million of the $21 million Walmart paid to its CEO would be sent directly to the feds, plus $6.3 million of the $9 million between $1 million and $10 million, it wouldn’t make sense for Walmart or its CEO to agree to his contract. Instead, the company would (hopefully) divert those millions back to the lower half of its other 2.3 million employees (more than half of whom, remember, make less than $20,000 a year).
You can think of this as a new form of trickle-down economics. Trickle-down economics (a.k.a., supply-side economics) posits that allowing the rich to keep their money will lead them to invest in their workers and research and development, creating new jobs — in other words, the wealth of the rich should trickle down to the average American.
Unfortunately, trickle down economics underestimated the power of greed. It also forgot that things only trickle down after they fill up a limited container; otherwise, they just keep growing.
In my version of trickle down economics, the maximum limit is $10 million, with money pouring out faster and faster as soon as it breaks $1 million. Extend this idea to corporate profits in general, and all of sudden, the nation itself, and all of its workers, will become as successful as the NFL.