Budget & Tax
Multimillionaire athletes can vote with their feet
February 4, 2014
Fans of the New York Yankees are probably pleased that their team has signed stellar Japanese pitcher Masahiro Tanaka to a seven-year, $155 million contract, but Tanaka himself might be less than thrilled when he gets his tax bill. Turns out Tanaka will lose almost half of those riches to federal, state, and city income taxes. About $87 million will be drained from his paychecks over the next seven years.
Even Yankees fan Chuck Schumer can tell you that if state taxes get too high, residents can simply move to another state. Certainly many highly paid athletes have seen the light and either moved to low-tax states or sought trades to teams in low-tax states. Angels outfielder Torii Hunter actually moved from California to Texas to take advantage of that state’s no-income tax environment, and when he signed with the Detroit Tigers he got further tax relief because Michigan’s state income tax rate is lower than California’s. Golfer Phil Mickelson drew fire from the big-government folks when he hinted he might shift his residence from the Left Coast to Texas for the same reason.
Lower tax rates do influence some sports stars when they decide where to live and work. It’s no secret that the Oklahoma City Thunder organization in many ways seeks to build for the long term by emulating the highly successful San Antonio Spurs. But of course the Spurs organization can woo potential players with the promise of no state income tax. The Thunder has already lost one player to Texas (though to what extent taxes were a consideration, we may never know). Here’s hoping one day the Thunder can add the no-income-tax arrow to its quiver.