SACRAMENTO, California—Expect Manny Pacquiao to avoid fiscal landmines when he returns to fight in the United States in April of next year.
Currently locked in a tax dispute with the Bureau of Internal Revenue in Manila, Pacquiao will surely train at the Wild Card Gym of his long-time trainer Freddie Roach in Hollywood, California.
But the eight-division world champion, still a marquee name in boxing after his easy victory over Brandon Rios in Macau last month, will never fight his next opponent—either Timothy Bradley or Juan Manuel Marquez—in the Golden State.
“I am no tax attorney,” my daughter Teresa Paula, a lawyer, said at dinner last night. “But my colleagues who are tell me promoters of mega fighters like Pacquiao avoid California because of its mega-high income taxes.”
No wonder Bob Arum, Pacquiao’s promoter has never booked his cash cow in California although the state is home to huge Filipino and Mexican communities, boxing’s traditional hotbeds of support.
Instead, Arum always has the smarts to schedule the fighting congressman’s bouts in Texas, the Lone Star State and mostly in boxing’s hub, Las Vegas in the Silver State of Nevada to maximize his and his boxer’s after-fight profits.
Nevada has no personal income tax. Nevertheless, Pacquiao still pays a king’s ransom when he boxes in Vegas. That’s because as a foreign athlete, he still has to face special withholding rules from the Internal Revenue Service on income earned in the United States.
So if Pacquiao, scheduled by Arum to fight in Vegas next year makes $25 million, he could end up earning $15 million after taxes, based on calculations under a progressive tax system, says a tax expert writing for a boxing blog.
Should he fight either Bradley or Marquez in California, Pacquiao’s take, after Uncle Sam takes a big bite of his purse, will be considerably less.
A tax attorney writing in Forbes Magazine said that’s because of California’s high income tax rates for people earning $1 million and above. Besides, the state’s tax collectors will get a piece of everything related to a Pacquiao fight, including merchandise sales, pay per view shares and money earned from endorsements.
Pacquiao’s bank assets have been frozen by the Philippine government until he proves that he paid taxes in 2008-2009 in the US following his victories against Ricky Hatton and Oscar de la Hoya.
A treaty between the US and PH prevents double taxation. Unless the issue is clarified though, he owes the BIR 2.2 billion pesos in back taxes as of July.
Pacquiao’s fans here tend to commiserate with their idol when it comes to his tax woes.
“If he hasn’t paid the taxes in the US for the bouts in question, Pacquiao will be hounded by the IRS when he returns to the US,” said Joe Jimeno, a Sacramento tax preparer.
“You know the drill, pay the IRS right now or pay the piper later,” said Danny Vivar, a Baguio attorney who immigrated to California in the early ’80s.
***
Happy to hear about the engagement of veteran actress Boots Anson-Roa to lawyer Francisco “King” Rodrigo Jr.
Boots and her late husband Pete were among the entertainers who barnstormed the US and Canada in 1976 to drumbeat the government’s then fledgling Balikbayan program.
I served as press officer of that delegation led by Lilia Rianzares-Andolong and included then San Juan Mayor Joseph Estrada, Gloria Diaz, Amalia Fuentes and Bert “Tawa” Marcelo, who I roomed with during the tour.