Ohtani Saves $100 Million in California Taxes

Hector and Mike talk about the latest report from the California Center for Jobs, where they looked at Shohei Ohtani's decision to defer most of his annual salary of $70 million over 10 years and the tax implications.  "Shohei Ohtani's new contract with the Dodgers is worth $70 million a year for 10 years, but he will get only $2 million a year while deferring the remaining $68 million to the following decade. In the interim, Ohtani will have to make do with his additional endorsement income of at least $40 million a year, assuming some of that is not deferred as well.    "Who gets to tax the deferred income will depend on Ohtani's official residence when the payments are actually made. If paid up front, the full $70 million would be subject to California's highest-in-the-nation 13.3% income tax rate plus an additional 1.1% based on the stealth-expansion of the California State Disability Insurance tax rate. … Deferring the income potentially saves Ohtani an additional $9.8 million annually in taxes, or $98 million over the life of his contract."  https://centerforjobs.org/ca/special-reports/special-report-california-strikes-out-on-ohtanis-blockbuster-dodger-deal  But on a smaller but equally impactful scale, how many others are retiring to other states to avoid paying California's income tax?  With a $68 billion deficit, the California exodus is real, and with it are higher-income earners who can afford to pack up and go.  https://ktla.com/news/local-news/are-californians-still-taking-over-texas-new-census-data-reveals-where-people-are-moving-most/   https://www.latimes.com/california/story/2023-12-21/california-cops-firefighters-flee-california-take-pensions-to-eagle-idaho https://www.sfchronicle.com/bayarea/article/california-exodus-states-move-18438760.php Will the legislature and Governor get the message, or will they find new ways to tax and increase fees on those left behind? On January 10, 2024, Governor Gavin Newsom will release his latest budget, which should give us a glimpse of how he plans to deal with the $68 billion deficit.