Tax increases could factor in MLB negotiations - FOX 29 News Philadelphia | WTXF-TV

Tax increases could factor in MLB negotiations

Posted: Updated:
(AP File) (AP File)

By RONALD BLUM

Team executives and agents wandered into the Agave Sunset lounge at the resort where the general managers' meetings were held in Indian Wells, Calif. Four of the six flat-screen televisions were showing election coverage, with the other two turned to sports.

President Barack Obama's victory over Mitt Romney was of as much interest to baseball's money men as the game scores, given the millions of dollars routinely guaranteed in player contracts these days.

As free agents negotiate deals this offseason, tax policy is an area that comes up along with the usual issues. Some players are wrangling for as much money as they can get before the end of the year to avoid a take hike in 2013.

"Front-loading would make sense if at all possible as tax rates will definitely go up on January 1st on all high-income taxpayers," agent Greg Genske said in an email. "The only question is HOW MUCH will the rates increase????"

This much is known for now: Starting Jan. 1, there is an additional 0.9 percent Medicare tax on wages above $200,000 for individuals and $250,000 for married couples filing jointly under the federal Affordable Care Act, a rise to 2.35 percent.

In addition, the Bush tax cuts are scheduled to expire at the end of the year, which could raise the highest marginal federal tax rate from 35 percent to 39.6 percent — although a deal between Obama and Congress could change that.

Oakland Athletics general manager Billy Beane figures agents will be on top of the changes — but the results of negotiations about the so-called fiscal cliff are unpredictable.

"I think if you're hopping around the potential of tax reform, you're probably chasing your tail," Beane said. "If they can predict when something's going to happen, then they're much further ahead than the lawmakers."

With baseball contracts worth as much as $275 million (Alex Rodriguez) and the major league minimum $480,000, tax policy affects every player who spends most of the season in the big leagues.

All-Star shortstop Jose Reyes, who has a $10 million salary next year, was traded from the Miami Marlins to the Toronto Blue Jays. While Florida has no state income tax, Reyes remains a New York resident from his days with the Mets and had high taxes to begin with. Ontario's provincial tax rises to 11.16 percent — on top of a Canadian federal level as high as 29 percent.

Among states with big league teams, income tax rates go as high as 10.3 percent in California and 8.82 percent in New York. At the other end, Florida, Texas and Washington have no state income tax. The top rate in the District of Columbia is 8.95 percent.

"I like ours; we're a no-tax state," Seattle Mariners general manager Jack Zdurienck said. "When we sit down with players, that's a huge benefit. I think any player out there that has an opportunity to play in a no-tax state gets benefits, enormous benefits. We hope that weighs in our favor."

According to an analysis done by a tax lawyer on the staff of agent Scott Boras, a player with a $10 million salary and average deductions who plays in Florida and is a resident of that state will see his taxes rise from $3.45 million this year to $4.09 million next year under current law. If traded to the Blue Jays, that player's 2013 tax would rise to $4.27 million. And if dealt to a California team, the tax would go up to $4.4 million.

By moving money from salary into signing bonuses, players can sometimes lower their state tax bills. Shifting money into December this year could reduce federal taxes.

"Tax measures are going to be discussed, but change most likely carries compromise on both sides," Boras said. "One thing is clear based on the nation's ballot totals: Many Americans are split on this subject."

In the end, most free agents choose teams based on where they want to play, not on lowering the tax cut on their income.

"It's a factor, maybe even a small factor," agent Craig Landis said. "If there's 50 variables, you can now make it a 51st. It's not usually going to be the drive, but it's something to consider."

And for teams, only the big spenders need worry.

Beane's Athletics, for instance, had the lowest payroll in the majors last season.

"It's probably not a situation I'll have to face in Oakland too much," he said.

 

Copyright 2012 The Associated Press.

  • Sports NewsSports NewsMore>>

  • Outdoor basketball courts losing popularity

    Outdoor basketball courts losing popularity

    Friday, July 25 2014 8:35 AM EDT2014-07-25 12:35:16 GMT
    Believe it or not this, some say New York's outdoor basketball courts are a dying entity. Even Rucker Park in Harlem -- where Dr. J and countless others honed their skills -- used to be standing room only all times of the day. Now there's plenty of room to stand on most days.Basketball programs like one at Chelsea Piers are gaining popularity. That means the place to hoop it up for many appears to be indoors.
    Believe it or not this, some say New York's outdoor basketball courts are a dying entity. Even Rucker Park in Harlem -- where Dr. J and countless others honed their skills -- used to be standing room only all times of the day. Now there's plenty of room to stand on most days.Basketball programs like one at Chelsea Piers are gaining popularity. That means the place to hoop it up for many appears to be indoors.
  • Jets eliminating paper season tickets

    Jets eliminating paper season tickets

    Tuesday, July 22 2014 2:04 PM EDT2014-07-22 18:04:58 GMT
    The New York Jets are doing away with paper tickets for season ticket holders, while offering those fans a rewards plan for showing up regularly and behaving properly.
    The New York Jets are doing away with paper tickets for season ticket holders, while offering those fans a rewards plan for showing up regularly and behaving properly.
  • Major League Baseball

    How Mets and Yankees can improve or contend in 2014

    How Mets and Yankees can improve or contend in 2014

    Monday, July 21 2014 9:55 PM EDT2014-07-22 01:55:20 GMT
    With the All-Star break over and the second half of the MLB season well underway, the New York Mets (46-52 as of July 20) and the New York Yankees (50-47 as of July 20) find themselves in the same situations each team is accustomed to at this time of the season. The Yankees are in the middle of the AL East Division title while the Mets are scrapping for every win possible to stay relevant in the NL East. But while the record says one thing, reality says another.
    With the All-Star break over and the second half of the MLB season well underway, the New York Mets (46-52 as of July 20) and the New York Yankees (50-47 as of July 20) find themselves in the same situations each team is accustomed to at this time of the season. The Yankees are in the middle of the AL East Division title while the Mets are scrapping for every win possible to stay relevant in the NL East. But while the record says one thing, reality says another.
Powered by WorldNow

WTXF-TV
330 Market Street
Philadelphia, PA 19106-2796

Phone: (215) 925-2929
Fax: (215) 982-5494

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices