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Friday, July 13, 2012

NPR: Did Steve Nash Sign with the L.A. Lakers for Tax Reasons?

NashNational Public Radio, 'Sports Tax Man' Is a Financial Quarterback:

NPR's Kevin Leahy consulted an accountant who calls himself the Sports Tax Man. ...

KEVIN LEAHY: Last week, point guard Steve Nash was on the market. Nash is Canadian, beloved in his home country. And the Toronto Raptors wanted him badly. ...

RAY RAIOLA: The way I like to look at it, he'll receive 50 cents on a dollar.

LEAHY: That last voice belongs to Robert Raiola, CPA. On Twitter, he's known as Sports Tax Man. Raiola ignored the Prodigal Son storyline and referred to a new Canadian tax law.

RAIOLA: In 2012, the top rate in the province of Ontario is 48%. In 2013, the top rate will be 49.5%.

That means Nash would pay more tax in Toronto than if he signed in, say, California. Suddenly a big offer from the Raptors doesn't look quite as enticing. Raiola doesn't work for Steve Nash, but it's his job to think this way. He calls himself a financial quarterback. ...

As for Steve Nash, the Canadian? He wound up signing with the Los Angeles Lakers. He'll play with Kobe Bryant, soak up the sunshine and avoid those steep Canadian taxes.

(Hat Tip: Nicole Zumwalt.)

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Comments

If it was for tax reasons, wouldn't he have gone back to Dallas? Methinks he signed for other reasons.

Posted by: the real anon | Jul 13, 2012 6:05:25 AM

Between fed, state, and FICA, Nash's salary in LA will be taxed at a marginal rate of ~47%. The delta will be about $25K per $1MM. I'd think the living expenses in LA would eat up that pretty easily, so I wouldn't think that this is - or, maybe, ought to be - a tax-motivated move.

Posted by: jpe | Jul 13, 2012 6:26:02 AM

what about California state tax? This article was pretty interesting on topic

http://finance.yahoo.com/news/professional-athletes-big-league-tax-071447565.html

Posted by: rt | Jul 13, 2012 6:45:48 AM

California has a state income tax, which, combined with the US federal rate, brings it within spitting distance of the new Ontario top rate. Dallas, as the real anon says in his comment, is in Texas, which has no state income tax. Phoenix, where Nash could have re-signed, has no state income tax. Nash seriously considered New York, which has a city income tax. Nash has an apartment in Manhattan.

The plain fact is, Toronto offered Nash $12 million per season. He signed in Los Angeles for one third less. So a tax difference of a few percentage points hardly mattered in his decision.

Moreover, if tax rates were an issue, he'd have looked for a team in the Cayman Islands, because if the Bush tax cuts on high income earners expires, he may end up paying more overall in tax than he would have paid in Toronto.

And a final point. unlike a growing number of US states, Ontario does not tax the appearances of visiting athletes and other performers. That earns Ontario-based athletes reciprocal exemptions from some of the states in which they play as they travel with their teams around their pro leagues.

This doesn't even get us into the area of tax planning, which in the case of a Canadian citizen who spends more than half his time out of the country, can create tax-lowering opportunities that don't exist for the rest of us who reside in Ontario full time. The pro teams in Ontario are able to make good use of aggressive tax planning to lower the tax hit to competitive levels.

Posted by: David | Jul 13, 2012 7:14:49 AM

Good grief, Paul. You started posting multiple stories from The NY Times and now are adding stories from NPR. Are you trying to torture us?

Posted by: Woody | Jul 13, 2012 7:39:45 AM

Note to rt: I wish it were true, that Phoenix has no state income tax.

Posted by: Bob | Jul 13, 2012 4:18:19 PM