The Houston Astros are hated for cheating. The Dodgers didn’t cheat. But outside of Los Angeles, they’re becoming more and more hated by the day.
The supply of money seems infinite. The same goes for the All-Star lineup. But the postponement of the contract may be what irritates haters the most.
The defending World Series champions have shored up their roster with a series of “play now, pay later” deals, all of which are subject to collective bargaining agreements and give the Dodgers a small exemption from luxury taxes. So the haters ask can someone please stop the Dodgers?
Josh Becker wants that too. He is a California state senator and a Democrat from Menlo Park. The Dodgers have deferred more than $1 billion in payroll over the past five years. Every dollar of deferred salary can be a dollar that the state cannot tax.
“The Dodgers are exploiting that loophole,” Becker told me. “It was never intended for such a remote purpose.”
The loophole is: Under federal law, if you earn a salary in one state and retire in another state, you may not have to pay income taxes on the salary you deferred for retirement.
This puts California at risk of losing up to $138 million in revenue due to the Dodgers’ postponement, and if Ohtani returns to Japan or moves to another state after his contract expires, the contract alone could cost him $90 million. It becomes a dollar.
“He’s taking advantage of something that’s meant for people who have $20,000 or $25,000 pensions, people who are taking a small amount of their pension as what will essentially be their retirement,” Becker said. said. “That was the original meaning.
“We’ve built a system, other people will abide by it, and you’re basically evading taxes that other people have to pay. That’s basic fairness. ”
In December 2023, the Dodgers signed Ohtani to a 10-year, $700 million contract, with $680 million deferred beyond the term of the contract. Four weeks later, Secretary of State Maria Cohen said the deal demonstrated the need for Congress to limit the amount of money that can be deferred without tax.
“This action would not only create a fairer tax system, but also generate additional revenue that can be directed to addressing important pressing social issues and promoting economic stability,” Cohen said in a statement. .
Last March, Becker introduced a bill in Congress asking Congress to “place a reasonable cap on deferred compensation.” The first line of the bill: “In December 2023, the Los Angeles Dodgers baseball team signed pitcher and batter Shohei Ohtani to a 10-year, $700 million contract.”
The bill passed the state Senate but died in the Assembly. When Becker realized the bill would not pass, he withdrew it.
California’s income tax rate for high earners is 13.3%, the highest in the nation. It would make economic sense for players and others to retire to states like Florida and Texas, which have no state income tax.
Among the concerns Becker said he’s heard about his bill is that wealthy executives, not just ballplayers, benefit from these deferred compensation.
“They shouldn’t use it either,” he said. “Let’s close the loophole.”
Becker said this isn’t just an issue with Ohtani or the Dodgers. The idea is to use the attention on Ohtani and the Dodgers to try to reform the tax code.
Becker said he may introduce the bill again. His timing could have been better. This bill basically asks Congress to make some people pay more in taxes. The Colorado Rockies have a better chance of winning the World Series this year if Congress passes such a bill and President Trump signs it.
“If anything, they’re more focused on cutting corporate taxes than making people pay their fair share,” Becker said.
Becker is the San Francisco Giants’ territory representative, but he grew up in Philadelphia and remains a Phillies fan. He doesn’t really blame the Dodgers. He blames Congress. Hmm, but he respects the Dodgers.
“The Dodgers are building a bit of a dynasty there,” he said.
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