Shohei Ohtani, a shrewd millionaire, is wrong to be California’s biggest tax dodger | Opinion
When Major League baseball’s most coveted free agent was signed recently by the Los Angeles Dodgers, Shohei Othani of Japan did something that seemed selfless and remarkable. He opted to defer the bulk of his contract - a staggering $70 million a year for 10 years - until the contract had expired. Initially, this story was told only through the prism of competitive sports - wasn’t it great that the Dodgers could sign the best player in the world but avoid paying full price for him anytime soon?
It has turned out to be a brilliant move for Ohtani’s wallet as well. He was maximizing his ultimate pay by avoiding California’s record-high income taxes until he could leave the Dodgers and the Golden State before his mega millions rolled in.
Opinion
Ohtani’s deferral of his lavish California income has caught the attention of the State Controller, Malia Cohen. She believes Ohtani’s deal merits the attention of the United States Congress. “The absence of reasonable caps on deferral for the wealthiest individuals exacerbates income inequality and hinders the fair distribution of taxes,” Cohen said in a press release on Monday.
Credit Cohen for rightly raising the right question.
Why should some of our richest people like Ohtani be allowed to avoid income taxes? If you make $700 million in California, is it too much to ask to pay your taxes here like everybody else?
Normally when California’s richest people dodge their taxes leaving the state, the government has no idea. Such schemes are not usually announced in a press release or somehow uncovered by the media.
Ohtani’s historic contract, however, was under an intense public spotlight. And its unprecedented plan to defer the big bucks for a decade raised an inevitable question. Why?
Because his handlers have studied the tax codes of California and the United States.
By one noted press estimate, Ohtani will avoid $98 million in California income taxes over the next 10 years if he defers his paycheck until he no longer lives here.
The prospect of California losing $98 million from any source is not baseball trivia.
The unpaid taxes by Ohtani could have paid the tuition of more than 17,000 lower-income California State University students for a year.
It could have provided scholarships for more than 7,800 needy University of California students for a year.
It could have paid for all the costs to educate 6,116 students in California’s public school system for a year.
That is enough money to buy 15,076,923 Dodger Dogs.
“The current tax system allows for unlimited deferrals for those fortunate enough to be in the highest tax brackets, creating a significant imbalance in the tax structure,” Cohen said in her formal statement.
However noble, Cohen’s plea to Congress is akin to a baseball fan praying for a miracle when the team is down to its last strike.
This past Congress went down in the record books as among the least productive in history. A surgical amendment to the tax code on tax deferral is beyond far-fetched.
Soon it is time to play ball.
Ohtani is the most expensive Los Angeles Dodger of all time and he may well be California’s biggest tax dodger of all time.
