Nikola Jokic Experiences $1,410,000 Loss as Michael Jordan Dominance Impacts His Income, Citing First World Factors

Nikola Jokic has been instrumental in the Denver Nuggets’ impressive performances this season, and he secured the most lucrative contract in NBA history last July. Despite being on track to earn an enormous salary of $46.9 million for the upcoming season, Jokic will actually lose $1.4 million due to an unusual circumstance related to Michael Jordan. This peculiar reason can be traced back to a revenge story from the early 1990s.

The Denver Nuggets, who secured the top seed, displayed an impressive performance throughout the playoffs, suffering only three losses on their way to the NBA Finals. While the odds seemed to be in favor of Denver, the Eastern Conference champions, the Miami Heat, managed to even the series in Game 2. Interestingly, the NBA Finals played a significant role in reducing Jokic’s salary. Furthermore, this situation applies not only to the two-time MVP but to every NBA player.

Nikola Jokic takes home only 51% of his income

NBA players are renowned for being among the highest-paid athletes worldwide. However, their earnings are not fully retained due to the substantial tax obligations they face. Nikola Jokic, for instance, will experience a significant reduction in his income, with approximately $22.67 million being lost to taxes on his annual earnings of $46.9 million when his new contract of 5 years and $272 million goes into effect next season.

NBA players are subject to various forms of taxation on their annual salaries, including Federal Tax, Colorado Tax (in the case of Denver-based players like Nikola Jokic), Agent Fees, Jock Tax, and FICA (Federal Insurance Contributions Act). It is worth noting that the introduction of the ‘Jock Tax’ specifically targeted professional basketball players, and Michael Jordan played a significant role in its implementation.

With the exception of a few states, all states in the United States have adopted the practice of collecting ‘Jock Tax.’ This taxation policy was widely implemented following the memorable 1991 NBA Finals, during which Michael Jordan secured his first of six NBA championships against the Los Angeles Lakers in California.

Jock tax was introduced because of Michael Jordan

In basic terms, each NBA player is obligated to pay a resident tax for earning a game fee when playing games outside of their home state. The origin of this tax can be traced back to a tale of revenge following the 1991 NBA Finals. After the Chicago Bulls, led by Michael Jordan, triumphed over Magic Johnson’s Lakers in the Finals to secure the championship, Jordan was subjected to taxes by the city of Los Angeles for the time he spent partying in LA. In retaliation, the state of Illinois introduced the ‘Michael Jordan’s Revenge’ tax, imposing it on every player from California who played games in Chicago.

The situation escalated from that point onward, and currently, nearly every state imposes a jock tax on athletes who visit for games. It is not only the players who are affected, but also coaches, trainers, doctors, and anyone else who earns additional income while working in a different state, as they are required to pay the jock tax.

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