Donald Thomas to Colts

[Husky68]

You guys are way way way overblowing the numbers. $10m in Tenn. is NOT worth $1m more than Cali.

You guys haven't accounted for multiple factors here. For one, state income taxes offset federal taxes. Also, realize that 10% is taken off the top by agents, so $1m of that contract is already gone.

And, most importantly of all, you are paid by the amount earned in the state you worked. So, half of the money is taxed at the California rate, and the other half outside of California.

I don't know what the national average is for income tax, but given the NFL schedule, your total rate would changed year-by-year based on what divisions you play in that year.

So, a Miami Dolphin has to pay taxes for 2 games in New York (Jets and Bills), and one game in Mass. Then another 5 games in AFC cities (Pitt, Baltimore, Cleveland, Cincy, and the like).

When it comes down to it, there is some difference. Not a big one.

Essentially, because the money is only taxed in the state it's earned, you need to halve the tax% differential, and THEN consider that 1/3rd of it is offset by deduction on federal taxes. This literally means that the Cali. top rate is halved and then chopped by a third after that cut because of deductions.

Ha, posted with no comment - duh. Comment is that depending on where you reside, you still get taxed as a Cal. resident if you are a Cal resident even when you work elsewhere for some period of time. You just pay taxes in other state and get to deduct/credit it against your Cal state taxes. Cal isn't about to say "oh you worked in NY for a day, I'll let them tax you on it and leave you alone on this", they are going to want "their" share of taxes also. That is why you might want to "live" in Fla. if professional athlete so "home games" get no state taxes, not sure what you do with state taxes you pay when play in NYC (do you pay on 1/16th of your annual salary) and since no Fla state income tax you just pay it and use it on your federal return as best you can.
Looked at Cal taxes and are 12.3% over 1mm $, even 60% of that is a lot; not sure what the 1% mental health tax of 1% on income over $1mm is but think it is additional. The deductibleness of the Cal State tax from fed income taxes would also depend on the AMT at federal level, since even at my income level I've run into this issue, would expect that guy earning in millions would also.

 

[WhereistheDove?]

Good for him getting paid. The downside is he'll be lining up against JJ Watt twice a year, which rarely ever works out well for the offensive lineman.

 

[Marty Jackson]

It's not politics it's economics. Which, if you have been following the NFL free agent period, pretty much drives professional football. Teams in markets with no income tax, like Miami, have a a built in monetary advantage. And every agent knows the true value of the contract that his clients are signing. When you see the numbers, remember the actual dollars that a player pockets is much less. And yes, tax policies play a key role.

would seem Obama's impact on taxes would be equal across the board since he controls federal tax policy.
are you possibly blaming Obama for different state tax policy?

 

[upstater]

Ha, posted with no comment - duh. Comment is that depending on where you reside, you still get taxed as a Cal. resident if you are a Cal resident even when you work elsewhere for some period of time. You just pay taxes in other state and get to deduct/credit it against your Cal state taxes. Cal isn't about to say "oh you worked in NY for a day, I'll let them tax you on it and leave you alone on this", they are going to want "their" share of taxes also. That is why you might want to "live" in Fla. if professional athlete so "home games" get no state taxes, not sure what you do with state taxes you pay when play in NYC (do you pay on 1/16th of your annual salary) and since no Fla state income tax you just pay it and use it on your federal return as best you can.
Looked at Cal taxes and are 12.3% over 1mm $, even 60% of that is a lot; not sure what the 1% mental health tax of 1% on income over $1mm is but think it is additional. The deductibleness of the Cal State tax from fed income taxes would also depend on the AMT at federal level, since even at my income level I've run into this issue, would expect that guy earning in millions would also.

I've been through this before. I know how it works. But what you're not getting for pro football is that players establish residency for 16-18 weeks of the year. That's it. Players are paid after games. They don't receive paychecks throughout the year. In California, you're a resident if you've lived there a certain % of the year.

 

[huskypantz]

would seem Obama's impact on taxes would be equal across the board since he controls federal tax policy.
are you possibly blaming Obama for different state tax policy?

Would it be reasonable to surmise that if Obama cuts federal funding to states and states make up the difference by raising taxes, that Obama's tax policy could very well impact state (and local) tax policy?

 

[Marty Jackson]

Would it be reasonable to surmise that if Obama cuts federal funding to states and states make up the difference by raising taxes, that Obama's tax policy could very well impact state (and local) tax policy?

no... his policies would still not target specific states. how states choose to make up the difference would still be state legislatures making the call.