And this is just the athletes.
For millionaire athletes, states with highest tax rates may not make the cut
By Joshua Rhett Miller
Published January 30, 2013
FoxNews.com
Jan. 17, 2013: Phil Mickelson hits from a fairway on the fifth hole during the first round of the Humana Challenge golf tournament at the La Quinta Country Club in La Quinta, Calif. (AP)
Outfielder Josh Hamilton left Texas, where there's no state income tax, to sign a five-year, $125 million deal with the Los Angeles Angels, where he'll be subject to California's new 13.3 percent state income tax. (AP)
Torii Hunter, left, mugs for the camera during a Jan. 26 autograph session in Detroit. Hunter, 37, said last year he moved to Texas because of the state’s lack of income tax. (AP)
Zack Greinke, 29, agreed to a six-year contract, $147 million deal with the Los Angeles Dodgers in December. The deal was the largest ever for a right-handed pitcher. (AP)
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Is Lefty's stance on California's tax hikes a sign of things to come for millionaire athletes?
The Golden State's new 13.3 percent income tax on top earners prompted golfer Phil Mickelson to say earlier this month he was considering a move, and according to the accountants who advise millionaire athletes, he was just saying what a lot of jocks were already thinking. Federal taxes on the top income bracket just rose by roughly 5 percent, and, while there's nothing rich athletes can do about that, they are paying attention to which states dip into their game checks — and how much they take.
“They’re going to have an exodus of people,” said John Karaffa, president of ProSport CPA, a Virginia-based firm that represents nearly 300 professional athletes, primarily in basketball and football. “I think they’ll see some [leave California] for sure. They were already a very high tax state and it’s getting to a point where folks have to make a business decision as well as a lifestyle decision.”
The taxes of professional athletes became incredibly complicated in the early 1990s, when aggressive state and local tax collectors began targeting them to pay non-resident income taxes. Technically, all employees who earn money for work done outside their home states have to pay non-resident taxes, but enforcement has focused on millionaire athletes with publicized work schedules to the extent is is commonly called the "jock tax." Although ballplayers can't get out of the state and local taxes they pay while on the road, where they play their home games can make a huge difference. California takes 13.3 percent on income above $1 million, but states like Florida, Nevada and Texas are among seven that take nothing.
"They were already a very high tax state and it’s getting to a point where folks have to make a business decision as well as a lifestyle decision.”
- John Karaffa, president, ProSport CPA
It adds up, says Karaffa. As tax season enters full bloom, he expects to see an uptick in the number of clients who will consider leaving California. Under a hypothetical calculation, the tax difference for a single professional athlete making roughly $10 million a year between being a resident of California versus Florida is around $800,000 annually.
“They’ll start to see it more from paycheck to paycheck,” Karaffa said of the state’s tax bite. “And it’ll actually help my practice because guys will ask more questions and be more attuned to this. You’ll see more attention paid from professional athletes to their taxes this year because this is their largest expense.”
Karaffa, like other accountants interviewed for this article, declined to identify his clients, but relocation for tax relief by men and women who play games for a living isn’t new. Former Los Angeles Angels outfielder Torii Hunter, who recently signed with the Detroit Tigers, made headlines last year when he announced a move to Texas because of the state’s lack of income tax. The move didn't shelter his game checks from income taxes, but it did allow him to save taxes on other income, including for endorsements and autograph signings.
Hunter did save taxes on his $12 million salary by leaving California to sign with Detroit, where the Michigan state income tax is a flat 4.35 percent. And more and more ballplayers are taking taxes into account when signing with new teams or giving their teams permission to trade them.
“They’re thinking about it more often, absolutely,” said Art Hurley, partner with Daszkal Bolton and founder of its professional athlete and celebrity niche practice, Game Plan. “It’s something the professional and their advisers have been thinking about for a long time.”
For top golfers and tennis players, who make most of their money through endorsements not subject to the "jock tax," the choice of where to live has a huge impact. Mickelson, of Rancho Santa Fe, Calif., quickly apologized for riling critics on Jan. 20 when he said an effective federal and state tax rate of 60-plus percent seemed excessive. But he was likely only saying what others were already thinking, especially after California voters approved Proposition 30 last November. In addition to raising the state sales tax, it imposed a menu of new tax brackets. Just the increase of the top bracket to 13.3 percent from 10.3 percent cost Mickelson roughly $1.8 million of his $60 million income for 2012.
Mickelson’s longtime rival, Tiger Woods, acknowledged last week that he left California for Florida in 1996 upon turning pro because of the difference in state tax. At the time, California’s top rate was 9.3 percent for individuals earning more than $32,000. Woods, who earned $56.4 million in 2012, kept roughly $7.5 million this year in funds he otherwise would have owed to the state of California. Mickelson, who will now pay the 13.3 percent rate, will owe the state about $8 million.
“The more expensive it gets, the more you’re going to look elsewhere,” Hurley said. “'How much extra am I willing to pay to live in California?' And when you have a guy like Mickelson who makes so much money … just think about if he was living in Florida.”
Read more: http://www.foxnews.com/sports/2013/01/30/federal-state-tax-hikes-could-send-athletes-migrating-to-tax-friendlier-states/#ixzz2JWWdwyRs
Originally posted by sasquatch672Boo Hoo Hoo...Let's all cry a river for those poor millionaires !!:'(:'(:'(:'(:'(:'(:'(
And this is just the athletes.
For millionaire athletes, states with highest tax rates may not make the cut
By Joshua Rhett Miller
Published January 30, 2013
FoxNews.com
Jan. 17, 2013: Phil Mickelson hits from a fairway on the fifth hole during the first round of the Humana Challenge golf tournament at the La Quinta Country Club in La Quinta, C ...[text shortened]... -tax-hikes-could-send-athletes-migrating-to-tax-friendlier-states/#ixzz2JWWdwyRs
- Joined
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Originally posted by sasquatch672You can live in a mansion in (most parts of) Florida for the cost of a bungalow in Palo Alto but who'd want to? Professional athletes who travel much of the year anyway, it seems.
And this is just the athletes.
For millionaire athletes, states with highest tax rates may not make the cut
By Joshua Rhett Miller
Published January 30, 2013
FoxNews.com
Jan. 17, 2013: Phil Mickelson hits from a fairway on the fifth hole during the first round of the Humana Challenge golf tournament at the La Quinta Country Club in La Quinta, C -tax-hikes-could-send-athletes-migrating-to-tax-friendlier-states/#ixzz2JWWdwyRs
Originally posted by JS357I'm pretty certain that the majority of foreign professional golfers who decide to play the PGA tour end up living in Florida.
You can live in a mansion in (most parts of) Florida for the cost of a bungalow in Palo Alto but who'd want to? Professional athletes who travel much the year anyway, it seems.
- Joined
- 29 Dec 08
- Moves
- 6788
Originally posted by normbenignWhy not? Homestead exemption laws
I'm pretty certain that the majority of foreign professional golfers who decide to play the PGA tour end up living in Florida.
http://en.wikipedia.org/wiki/Homestead_exemption_in_Florida
favors property ownership in a way that attracts those having capital to protect from seizure, and the luxury neighborhoods make for the good life. That and the income tax making it their residency of record, makes sense to me. Florida tax revenues are tourist-centric.
"Florida's homestead exemption providing an exemption from forced sale before and at death are among the most protective in the United States as it provides "no limit" to the value of certain real property that can be protected from creditors. The property tax exemption clause of Article VI renders property tax-free to the extent of certain dollar amounts in the value of the homestead."
I am not complaining. I grew up in Florida and have a view of Florida history that understands why property ownership in Florida has such a "special" status, going back to the boom and bust of the 20's. That protection sold land and justified reclaiming swamps and filling in bays by dredging.
Tierra Verde: "Waldron-Green Associates applied for a dredge-and-fill permit in 1957. Their intent: to pump some 9,000,000 cubic yards (6,900,000 m3) of sand and shells from the bottom of the bay and thus enlarge and raise the ground level of the three keys Doc Waldron had purchased from the State and join them to create one large island intersected with canals between the sections. Meanwhile, others sought county and state permission to dredge and pump the bay bottom and build up Bird Key, today's Bayway Isles and Isla Del Sol. Miami developer Leonard Ratner purchased land which became the site of Eckerd College. Hamilton Disston, the largest landowner in the United States, began and lost his Disston City development, later renamed Gulfport."
That protection protected my sister from loss of the very modest home her husband personally built and she lived in all her life. It protects those who have a lot of money, too.
But my dad and others lost some of the best fishing holes in the state. Small change.
Somebody needs to tell the real story of the relationship between government and private interests in the development of Florida. Private interests are only too happy to have government make their plans more profitable.
Originally posted by JS357Private property ownership is vital to growth, and a strong economy.
Why not? Homestead exemption laws
http://en.wikipedia.org/wiki/Homestead_exemption_in_Florida
favors property ownership in a way that attracts those having capital to protect from seizure, and the luxury neighborhoods make for the good life. That and the income tax making it their residency of record, makes sense to me. Florida tax revenues are tourist- ...[text shortened]... ate interests are only too happy to have government make their plans more profitable.
Mises in "Human Action" handles the issue of "externallities" as the result of common areas or public property, which nobody needs to take care of or improve. That held true in most of the world of hunter/gatherers, where casual farmers moved on as soon as the land was depleted. There was plenty more. Scarcity made private property necessary. And it seems that for the most libertarian views, protecting property is one of the few legitimate roles of government.
Originally posted by normbenignDo you want to justify the first sentence.
Private property ownership is vital to growth, and a strong economy.
Mises in "Human Action" handles the issue of "externallities" as the result of common areas or public property, which nobody needs to take care of or improve. That held true in most of the world of hunter/gatherers, where casual farmers moved on as soon as the land was depleted. The ...[text shortened]... ost libertarian views, protecting property is one of the few legitimate roles of government.
In the rest you seem to be justifying private ownership of wealth generating property on the basis of scarcity - but we live in an age of plenty.
Also your point is confused you seem to have confabulated hunter gatherers with neolithic farmers.
There have been several, quite successful, systems for the good regulation of common land going back into antiquity - I don't think the "tragedy of the commons" argument works in the slightest - even apart from the large number of counter-examples, it's not sufficiently specific - it's quite easy to adapt to privately owned property; witness the large number of empty properties in the U.K. held as assets and not let out or used for any purpose other than a store of wealth.
Originally posted by DeepThought"Private property ownership is vital to growth, and a strong economy. "
Do you want to justify the first sentence.
In the rest you seem to be justifying private ownership of wealth generating property on the basis of scarcity - but we live in an age of plenty.
Also your point is confused you seem to have confabulated hunter gatherers with neolithic farmers.
There have been several, quite successful, systems for the ...[text shortened]... e U.K. held as assets and not let out or used for any purpose other than a store of wealth.
"Do you want to justify the first sentence." My reference and summary of Mises' arguments was intended to do that.
"In the rest you seem to be justifying private ownership of wealth generating property on the basis of scarcity - but we live in an age of plenty."
The comparative "plenty" of today is the result of better use of resources because of private property. And comparative plenty, still leaves us overall in a state of scarce resources. Even in relatively prosperous nations, there are plenty of unfulfilled wants, and sometimes needs. Scarcity still is the driving force of economics, causing acting men to seek to correct thing that cause them uneasiness.