Defer Contract Ohtani to Change California Tax Law

Will Shohei Ohtani LA Dodgers, who signed an astronomical contract, change the California tax law.

The Los Angeles Times, a U.S. media outlet, reported on the 9th that California’s inspector general, Malia M. Cohen, is asking the state legislature to change the tax law. He insisted on closing the system loophole that would prevent Ohtani from paying tens of millions of dollars in taxes to California.

Ohtani, who was the biggest free agent this off-season, confirmed his move to the Los Angeles Dodgers on the 10th of last month amid a lot of interest. The contract was signed a huge 10-year, 700 million-dollar contract. It is the largest contract in the history of professional sports in North America. The amount is well over 450 million dollars that the Kansas City Chiefs of the National Football League NFL spent in 2020 to recruit Patrick Maums, their main quarterback for a 10-year period, and more than 270 million dollars than Mike Trout’s 12-year, 426.5 million-dollar extension contract with the Los Angeles Angels ahead of the 2019 season in the Major League Baseball MLB.

Ohtani confirmed his move to the Dodgers through what he called a “defender contract.” Contrary to the contract details, Ohtani will play for the Dodgers for a much smaller amount. He will receive only 2 million dollars out of his annual salary of 70 million dollars. The total amount of the contract amounts to 97 percent, or 680 million dollars, will be paid later. Ohtani plans to receive all the remaining interest-free payments for 10 years from 2034 to 2043 after the contract expires.

Moreover, the contract is requested by Onati. Ohtani meant to postpone paying his big salary and to have the power to recruit other players to win the championship. After Ohtani was hired, the Dodgers strengthened its power by recruiting pitcher Yoshinobu Yamamoto, Tyler Glasnow, and outfielder Teosca Hernandez.

However, the California government is uncomfortable with Ohtani’s “defender contract.” Ohtani has to pay 37% federal personal income tax and 13.3% state tax. If you live in the U.S., you have to pay federal tax, but state taxes vary depending on where you live. California has the highest income tax among the 50 U.S. states.

If Ohtani leaves California after his contract ends in 2034, there will be no need to pay California’s personal income tax. According to the media, the California government will lose about $98 million about 129.4 billion won in tax revenue if Ohtani moves to another region. In response, Inspector General Cohen said, “The current tax system allows suspensions to high-income earners, causing an imbalance in the tax structure. If there is no reasonable limit for deferment of payment, it will inevitably cause income complaints,” adding, “I ask the state legislature to take decisive action. I think implementing a deduction limit for high-income earners is something that emphasizes social responsibility and contributes to a fair tax system.”

If California’s tax law changes, as Inspector General Cohen said, even if Ohtani moves to another area, he will have to pay taxes to California. 토토사이트

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