Baseball Star Shohei Ohtani’s New Contract Is a Massive Tax Avoidance Scheme. Nice! (ERIC BOEHM, 12.15.202, reason)
But unlike most sports contracts, that $700 million won’t be doled out over the 10-year term of the deal—and, as a result, both Ohtani and the Dodgers are poised to dodge (sorry) some of the taxes they might be otherwise obligated to pay on the record-breaking deal.
The 29-year-old Ohtani will collect $2 million in each of the next 10 years. The rest of Ohtani’s $68 million salary will be deferred for a decade, and the Dodgers will owe it to him in annual installments starting in 2034. By the time Ohtani collects the last of those payments in 2043, he’ll be 49 years old (and almost certainly well into retirement).
Because he’ll be playing most of his games in high-tax California, taking most of his pay via what’s effectively a fixed annuity gives Ohtani the possibility of avoiding some massive tax payments. “By the time he starts receiving the $68 million payments, he may be able to avoid state income taxes by living someplace like Florida without an income tax, or by moving back to Japan,” The Wall Street Journal reported this week.