This is the highest contract in the world’s professional sports history, surpassing the $674 million (889.1 billion won) of Lionel Messi (currently Inter Miami), who signed a five-year contract with FC Barcelona from 2017-21. Ohtani was the first free agent (FA) in Major League Baseball history to win a $400 million (527.8 billion won) contract.
With the Dodgers set as its destination, Ohtani’s tax is also a hot topic of conversation. The U.S. tax is largely divided into federal and state taxes. The federal tax is classified into seven categories according to income level, with the highest income tax rate at 37 percent and the lowest at 10 percent. The difference between the two is the state tax. Unlike the federal tax, state tax varies widely from state to state. Some regions, such as Texas, Nevada and Tennessee, do not have state tax. This is why PGA players, who are sole proprietors, mostly reside in Texas as a way to reduce their taxes. However, California, the home of the Dodgers, is one of the regions with high state taxes along with Oregon, Minnesota and Iowa with the highest tax rate at 13.3 percent. When combined with federal tax, the tax rate exceeds 50 percent.
Robert Raiola of PKF O’Connor Davis, one of the world’s leading accounting firms, posted on his social media that Otani is required to pay 37 percent of federal taxes, 13.3 percent of state taxes, 2.35 percent of Medicare and Medicare surcharges, and 1.1 percent of State Injury Insurance (SDI). Raiola’s total tax items are 53.75 percent, which is not all. The agent has to pay “jock tax” in addition to the agent’s fees.
Jock Tex is a so-called athlete’s tax that pays some of his income from playing in a state other than his home country. It is inseparable from MLB players who switch states all year round. Sports influencer Andrew Petcash estimated Ohtani’s Jock Taxes at 2 million dollars (2.6 billion won) per year, and said his annual salary is 33.6 million dollars (44.3 billion won). Converting his 10-year contract to 336 million dollars (443 billion won), the tax alone amounts to 364 million dollars (48.6 billion won).
MLBCOM, the official website of MLBCOM, said Otani’s contract includes “unprecedented deferred payments.” The suspension of payment is a method of receiving a certain amount of money after the contract period, but the Dodgers, which is full of salary cap (maximum payment for players), has given it a breathing room in its management. MLBCOM said, “There are tax benefits from the suspension of payment, but most of all, Otani wants to win.” Its main purpose is to enable the team to succeed (such as strengthening its power through suspension of payment).” Ohtani, who debuted in the big league in 2018, has never crossed the postseason threshold during his six-year career with the Los Angeles Angels. The highest salary, highest tax, and even the suspension of payment. Ohtani will join the Dodgers’ uniform by making various back stories.안전놀이터