Shohei Ohtani designated hitter for the Los Angeles Dodgers is all smiles while he greets fans at the Dodger FanFest at Dodger Stadium on Sat Feb 3, 2024 (AP News photo)

California Politicians and Shohei Ohtani Taxes

That’s Amaury News and Commentary

By Amaury Pi Gonzalez

Shohei Ohtani, today the biggest baseball star in the world, signed a 10-year contract with the Los Angeles Dodgers for 700 million dollars. The State of California Controller, Malia M.Cohen, who was born and raised in San Francisco, wants Congress to change the tax code to cap deferred payments. If this happens, Ohtani would owe more taxes to the State of California.

The two-way star contract with the LA Dodgers contains $680 million in deferred payments due from 2034 to 2043. California wants to tax Ohtani much more; however, if he is not living in California when he receives the deferred money, the State of California would not be legally allowed to tax Ohtani the 13.3% income tax plus 1.1% payroll tax in this State.

According to a calculation by the California Center for Jobs and the Economy, Ohtani can save $9.8 million per year in California taxes and $98 million throughout the contract with the deferred agreement in place. It was Ohtani and his financial team the ones who pitched the idea of the current contract structure.

This should not surprise anybody. California has one of the highest taxes in the nation, and California continue to lose residents, specially high earners who have moved to States with lower taxes, as well as corporate businesses who also relocated from the Golden State across the nation.

Not to mention the middle-class (or whatever is left of it) as they leave California for Nevada, Arizona, Florida and Texas. Funny with so many other problems in California, including a $68 Billion deficit, as a result of revenue decline in 2022-23 they are pointing at Ohtani’s contract.

William McBride VP of Federal Tax Policy at the Tax Foundation said this about the Ohtani and California tax debacle: “If Congress enacted restrictions on deferred income, it would put the state in a worse position in term of its ability to collect revenue from this high earners and star athletes, because they wouldn’t be here.”

By the way, Shohei Ohtani revenues extend beyond playing on the field, he also has other income from endorsements, commercial contracts and everything else for this international superstar, here and in Japan.

Let’s face it. Shotime is a worldwide star,and I for one, cannot blame him to look for his own interest, after all this is still America. Looks like Ohtani’s financial team outsmarted California politicians, and some in government are resentful.

Quote: Winning depends on where you put your priorities. It’s usually best to put them over the fence.” – Jason Giambi

Amaury Pi Gonzalez is the vice president of the Major League Baseball Hispanic Heritage Hall of Fame Museum and does News and Commentary at http://www.sportsradioservice.com