TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, December 27, 2017

New Tax Law May Give Big Edge To Pro Sports Teams In Florida, Nevada, Texas, And Washington

Washington Post, Florida, Texas May Attract Athletes After Tax Law Change:

Teams in Texas, Florida, Nevada and Washington state may have become more attractive destinations for free agents following the enactment of tax law changes.

Deductions for state and local taxes are capped at $10,000 in the year starting Jan. 1 for married couples filing jointly. That has a huge impact for athletes with seven- and eight-figure salaries.

“Obviously, the zero income-tax states have now more of an advantage than before,” said baseball agent Scott Boras, who is negotiating big-money deals this offseason for free agents J.D. Martinez, Eric Hosmer, Mike Moustakas, Jake Arrieta and Greg Holland. ...

For baseball, the AL West becomes the most attractive for tax status. The World Series champion Houston Astros, along with the Texas Rangers and Seattle Mariners, all have no state income tax. That means a player on one of those teams would play 99 or 100 of 162 games in states with no tax. Rangers President of Baseball Operations Jon Daniels calls the tax advantage “more of kind of a side benefit than a feature.” ...

An athlete making $10 million a season will get a federal tax savings of about $250,000 with the cut in the top rate. But one who plays half his games in California will lose roughly $650,000 in deductions: half the approximately $1.3 million state tax. That wipes out the entire savings of the federal rate cut. ...

A player who maintains an offseason residence in Florida or one of the other states with no tax — Alaska, South Dakota and Wyoming are in that group — would benefit by having more of his money paid in a signing bonus rather than salary that is attributable to a specific game. Nationals pitcher Max Scherzer’s $210 million, seven-year contract with Washington includes a $50 million signing bonus that he intended to shield from the District of Columbia’s top tax rate — 8.85 percent this year — by establishing Florida residency.

Tax, Tax Policy in the Trump Administration | Permalink


Don't forget TN!

Posted by: Haskell Murray | Dec 27, 2017 1:30:04 PM