Celebrating MLB Opening Day 2019 with a glance at how taxes affect America's Pastime
Thursday, March 28, 2019
Today is a holiday in our house. It's Opening Day for Major League Baseball.
Our formal celebration of the sport's first games of the year began when we lived in the Washington, D.C. area. In those days, there were no Nationals. The Baltimore Orioles ruled the MidAtlantic baseball world, which was fine with us since we lived in the Maryland suburbs and were Birds' partial season ticket holders.
Even better, my boss for our early years in the National Capital area was a big baseball fan himself. As such, he closed the office on MLB's Opening Day.
That meant as a group we all, even the few who weren't really fans of the game, headed up the road to Baltimore's now-gone Memorial Stadium. (Tickets were courtesy of the boss. We were on our own for concessions.)
Honoring baseball tradition: Back then, tradition held that each new MLB season began in Cincinnati.
Shortly after the toss of that baseball in the Red's National League park, the American League's first pitch was thrown out at the Orioles' game. And the hubby and I along with my boss and colleagues were there, cheering on the O's.
Even after I changed jobs, we continued to celebrate Opening Day, taking a vacation day to go to Orioles' games in person.
After our eventual move from the D.C. area, our MLB season opening tradition continued, although that now means usually watching the games on TV or listening via radio.
Expanded 2019 Opening Day: Nowadays, MLB is more egalitarian, at least with the start of this new season.
For the first time in the professional game's history, all 30 MLB teams will play on Opening Day 2019.
That means our baseball holiday festivities will officially start today, March 28, the earliest opening day ever for MLB, at noon Central Daylight Time with the Orioles in the Bronx to take on the New York Yankees in the first of ESPN's MLB Opening Day tripleheader.
At 3 p.m. CDT we'll mute the TV and turn on the radio to listen to our Houston Astros begin their quest to take back the championship in Tampa against the Rays. (Don't get me started on MLB's fan unfriendly TV blackout rules and my TV provider's lack of 'Stros' sports channel coverage.)
Then it's back to TV for the defending World Series Champion Boston Red Sox at the Seattle Mariners.
So as soon as this post is published, I'm done with work for the day!
Baseball and taxes: Of course, I couldn't leave the blogosphere without at least touching on baseball's connection to taxes, or vice versa.
I give you links below to earlier Don't Mess With Taxes posts on how taxes touch America's Pastime and sports in general:
- New tax law could discourage major league player trades
- Tax law change could imperil sports' box seats
- Writing off ballpark hot dogs, or how business meals, separate from entertainment expenses, remain deductible at 50% level
- Nationals face MLB luxury tax even as playoff hopes fade
- 6 MLB teams must pay $74 million in total luxury taxes
- America's pastimes: Baseball, ballpark proposals and taxes
- Lawmaker goes to bat for Texas Rangers' ballpark tax break
- Supreme Court's sports gambling ruling expected to lead to more nationwide betting and tax collection
- How to report Super Bowl & all gambling wins to the IRS
Tax effects on recent MLB player moves: Also, I've got to mention the frantic last few days of Spring Training and, of course, taxes.
Late March was when teams finally locked down the games' biggest free agents — Bryce Harper (now part of the Philadelphia Phillies; sorry, Washington Nationals fans) and Manny Machado (the former Oriole now with the San Diego Padres after a brief stint last season with the Los Angeles Dodgers), as well as some of MLB's biggest stars — Mike Trout's historic contract with the Los Angeles Angels [at Anaheim] and Houston Astros' extensions for All-Star third baseman Alex Bregman and future Hall of Fame pitcher Justin Verlander.
Taxes may have been a factor in Bregman's and Verlander's deals. Sure, it's not a bad idea for those players to stick with a team that's likely to be a World Series contender for at least a few more years. Plus, all their Houston home games are in no-state-income-tax Texas.
Other players, however, do have to think about, as the following items note, income taxes on their new, high-dollar contracts.
- Manny Machado to Avoid Big California Tax Hit With Creative Posturing from 12Up
- No, Manny Machado Can’t Avoid Paying California Tax by Being a Florida Resident from Taxable Talk
- A Quick Look at How State Income Tax Affects Huge Contracts from Cubs Insider
- Bryce Harper will net $55M more than Manny Machado after taxes, agent says from YardBarker/Sportsnaut via MSN
- Mike Trout's $430M contract: Comparing tax bills for California, New Jersey vs. no-income-tax states from Fox Business
- Why pro athletes may lose a fortune because of the new tax law from MarketWatch
The Machado and Trout signings apparently ignored conventional tax wisdom, with both players (and their agents) deciding to make California, one of the highest income tax states, their homes.
City as well as state tax tolls: But Harper's move up I-95 to Philly also will cost him when the city taxes are counted.
Sean Packard, tax director at OFS, a financial planning firm dedicated to working with professional athletes, notes in his column for Forbes:
Pennsylvania is one of the few states that includes a true signing bonus as allocable income, meaning a portion of that income is taxable to the state. Philadelphia, which has a higher tax rate than Pennsylvania, also includes signing bonuses as allocable income.
All told, Harper will pay a 6.5267% state income tax to Pennsylvania and Philadelphia on all of his allocable wages; $603,109 of that is on his [$20 million] signing bonus.
Throughout the life of his contract, Harper will pay Pennsylvania and Philadelphia nearly $9.3 million in taxes. The Nationals — whose home base, Washington, D.C., is not allowed to tax non-residents — reportedly offered Harper 10 years and $300 million on the last day of last season. Harper and [his agent Scott] Boras turned that offer down.
Another tax expert, however, thinks that in the grand scheme of ginormous deals for players (and their agents), all involved tend to be aware of potential taxes.
"Athletes more and more are taking the state and local tax considerations into account when they're calculating and comparing different offers," tax lawyer Stephen Kidder told The Inquirer/Daily News via Philly.com.
That's good advice for us all, regardless of our line of work.
Root, root, root for the home team: It's also worth noting that rooting interests could have affected Packard's and Kidder's differing takes on taxes and Harper's new deal.
Packard is a Nationals fan. I totally understand the tendency to look for a something that doesn't bode so well for a player who's jilted my favorite team.
Kidder, meanwhile, represents, the MLB Players Association, as well as Kidder represents the professional athletes' groups for the NFL, NBA, NHL, and major-league soccer. He's naturally going to lean toward supporting the moves those players make.
Yep, rooting interests always play a role, be it in sports or how we view tax decisions.
And with that, I'm outta here! Here's hoping your team wins today, unless your team is the Yankees or Rays!
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