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Post by Chris Hatfield on Dec 12, 2023 15:14:06 GMT -5
Again, I'm not sure this is a "loophole." I'm not sure who the constituency in MLB is that doesn't want this available. The players turned down the owners on limiting it. Owners can use it to get guys signed.
We as fans can understandably get frustrated by it, but again, it's a bookkeeping matter not really a competitive balance one.
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Post by wcsoxfan on Dec 12, 2023 16:14:07 GMT -5
For anyone interested, here is the section of determination of salary which details deferred compensation:
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Post by bluechip on Dec 12, 2023 16:31:15 GMT -5
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chaimtime
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Post by chaimtime on Dec 12, 2023 16:41:12 GMT -5
If this was presented as Ohtani signing for 10/460 and the Dodgers wanting to defer the payment at the same rate, and the accountants at the league office said “you gotta pay him 700m total for that to work for us” then everybody would be talking about how the Dodgers got screwed. That’s functionally the same as what happened here but the framing is flipped, so now it’s an affront to the game.
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Post by okin15 on Dec 13, 2023 9:59:43 GMT -5
So, million dollar question... What is the Dodgers' AAV towards the lux tax and for how many years?
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Post by jimed14 on Dec 13, 2023 13:14:13 GMT -5
So, million dollar question... What is the Dodgers' AAV towards the lux tax and for how many years? $46M for 10 years.
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Post by wcsoxfan on Dec 16, 2023 12:45:43 GMT -5
There's an extra wrinkle regarding income tax on the deferrals. California has a 13.3% maximum tax bracket which will soon rise to 14.4%. These taxes are applied to the state of residence at the time the income is received and not when it is earned (unlike federal income tax). So if Ohtani were to move to Texas, where there is no state income tax, he could avoid paying it altogether. It's more likely that he goes back to Japan where they have a slightly more complicated 10% local tax - I'm not sure if this would apply to the deferred payments (US & Japan have an agreement to avoid federal double taxation).
It should be noted that there are means by which California can try to receive a portion of the state taxes when the deferments are paid, but that's a legal matter.
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Post by scottysmalls on Dec 16, 2023 12:55:36 GMT -5
Passan on the Ryen Rusillo podcast said something about the Dodgers not having to actually hold any money aside for the deferral payments until 2026 and speculated that in that time they could, because of Ohtani, essentially make enough extra revenue to cover the entirety of the deferment and essentially everything after that is gravy.
That seems like a ton to expect in two years and it sounded more like speculation than sourced from the Dodgers, but I found interesting nonetheless.
Unclear to me why they could wait until 2026 to start holding the deferment money though.
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