The money was earned for work performed in California, so I think he'd still be on the hook, though I'm not positive. Otherwise, employees would do this regularly just to avoid taxes. It's similar to how Astros players still have to pay California taxes for games they play in LA or SF or whatnot and California players don't pay taxes for the money earned playing games in Texas.
that would apply to the money he is making now. The deferred money would not be California tax eligible if he’s not living there in 10 years. I’m guessing it would have to do with how the contract is structured though. This is not unusual in finance. Edit: CPA wife just told me California has already addressed this loop hole and it will be taxed since it was sourced and contract signed in California for a California entity. He’s gonna pay no matter what
Interesting - I had no idea. It's apparently because the compensation is deferred 10 years. If the money was paid 9 years out, it would be taxed based on his employment: Residence can affect overall tax status Your federal tax obligations for deferred compensation will be the same regardless of where you live when you receive the money. However, where you live could have a significant impact on your state tax liability—if your payments are structured the right way. "Generally, deferred compensation is taxable in the state where the employee worked and earned the compensation, regardless of whether the employee moves after retirement," says David Walters of Palisades Hudson Financial Group in Portland, Oregon. "However, if the employee has elected to take the deferred compensation payments over a period of 10 years or more, the deferred compensation payments are taxed in the state of residence when the payments are made." This can make a big difference if you move to a state that has no state income tax, such as Florida, Washington or Nevada, or at least to one with a lower income tax than where you earned the money
Dodgers are flexing their financial resources much like the yankees did in the 90s. It will just be an even bigger epic fail when they choke in the playoffs. Nowadays with analytics, many teams can win without being the highest spender
Agreed. It makes it that more amazing how the Astros have been able to stay near the top for so long and that their window is still open. If they make these 2 signings, I think it will take them over the top and they will finally buy a WS. Wouldn’t it be grand if the MLB was able to make all the local TV rights go into a revenue sharing pot? I know that’s anti-capitalism, but so are salary caps and the other sports have managed to make them work, especially football.
The deferred contract is a loophole that must be plugged in the next CBA. It's just ridiculous that 97% of a contract can be a deferred. The Dodgers basically got the best player in the game for $2 mil a year for the next decade so they can have all the cash flow to sign other top tier players. If the big market teams can do this there is little chance left for the smaller market teams in the league.
The this is a garbage take. Nothing is stopping a small market team owned by a billionaire from offering a deferred contract. Hell, layaway is actually better for cheap owners would don’t actually have to pay the money right away but kick the can down the road while their wealth grows. you’re just simping for cheap billionaires that refuse to spend and would rather use their teams as a cash cow than try to win. Sell to an Arab who actually cares about winning instead
I can't believe Shohei is going for it. He will ultimately be losing hundreds of millions of dollars by deferring it.
Even though the majority of the contract is deferred it still counts around 46 mil per yr towards the luxury tax. What it does do is it helps the Dodgers sign additional players now because they have 68 mil that they don't have to Shell out now and the coming years. Not that they're strapped for $$ to begin with. Their revenues in '22 were 581 mil. By deferring a large chunk of the contract they have an additional 24 mil to play with in regards to the luxury tax (70 mil minus the 46 mil).
I despise him for this. Especially because it was his idea and to do it interest free all because he chose to stay with the Angels on a losing team. Lol he was not about winning then….
This would only be true if there was a team out there offering him $700MM non-deferred. There is no evidence that's the case. So he's only losing hundreds of millions of dollars that no one was ever offering him. In reality, he got the contract everyone expected him to - 10 years in the $400-$500MM range.
Ohtani is only giving up money if he received other offers in excess of $460M with no deferred money. And even then he likely would have needed that offer to come from a team in NY or LA since his market for endorsements is affected by where he plays. If Toronto offered say $500M/10yrs, I still think he came out ahead signing with the Dodgers. The narrative that Ohtani is stupid or generous seems really silly to me.
it’s almost like money is secondary to winning for him. The antithesis of the modern American pro athlete
