Could CA income tax affect ability to sign players?

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Originally Posted by pg1067

It's not as simple as where they "live" or where they own homes. Taxation of professional athletes is an extremely complex issue. Not only do they potentially owe income taxes in their state of domicile (i.e., state of permanent residence), but they also potentially owe income taxes in every state in which they (a) have a residence, and (b) play a game. For example, in 2012, the Kings played three games in the State of New Jersey and probably spent about 8-10 days in NJ in advance of and between those games. As a result, the Kings players will owe NJ state income taxes based on their earnings attributable to those games.

I don't pretend to know all the ins and outs of this, but this article does a pretty good job of highlighting the issues: Hodgson Russ LLP - The Multistate Tax Quandary for Professional Athletes




This is true of the players who play and live in non-income tax states as well, so it doesn't negate the impact of state taxes. To suggest that "good tax dude[s]" and charitable work can make up for high state taxes is naive in the extreme; it is a very real issue.




I think the impact of state taxes on a team's ability to sign players is fairly minimal. The top players do not disproportionately congregate to teams in Texas and Florida. In fact, it could be argued that they disproportionately congregate to teams in high income tax states like California, New York, New Jersey, and Massachusetts, whose teams have won 12 World Series, 7 Stanley Cups, 9 Super Bowls, and 7 NBA Championships over the past 25 years (by contrast, teams in Texas and Florida have won a total of 10 titles over the same period).




Jerry Lewis and Redd Foxx??? Not exactly current, and don't/didn't they live in Vegas because that's where they performed a majority of their work? Huge numbers of high earners in the entertainment industry live in high income tax states like California and New York.

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No, it's not just the enterainment industry who've maintained Nev. residence. When living there, I was acquainted with an off-shore platform Oil Driller, who kept Vegas as his per. residence. As for Lewis and Foxx, neither were exactly favorites of locals, but that's another story. With no state taxes in Nev. it's been famous for high earners in any business to keep perm. residence there.

Taxes are voluntary...

http://images4.wikia.nocookie.net/__...ley_Snipes.jpg

Only need to live several months out of the year to claim residency. Might be different now but, used to be 6 months.

I'm glad I left California

It's not just the states, but some cities will require them to pay some sort of tax too. This is an offshoot of the commuter tax that a lot of cities in the northeast have implemented. Don't know if it happens in any other areas of the country, but cities started taxing the income of people who work in the city, but don't live there. A couple of years ago, some smart bureaucrat in Philly figured out that professional athletes should be counted as non-residents as well. PA's income tax is 3.07%, and Philly's non-resident tax is around 3.5%. Washington DC wanted to charge one, but they are prohibited from doing so.

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Originally Posted by rajuabju

Not looking to get political here...

But with CA's income tax on top earners now above 13%, anyone else besides me think that this could affect the ability of the Kings to sign top-flight players, vs teams located in other states with low (or even no) personal state income tax?

If I were a player looking to earn a big payday, and was looking at my options, a 13% hit to my take home pay would certainly make me think twice about California teams vs a team such as the Dallas Stars or even Florida Panthers who are in states with no income tax...

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i believe you have to live in the state you pay taxes for, for 9 months out of the year. so a kings player could claim a different state (arizona) but they would have to live there at least 9 months of the year. might not be possible to do logistically

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Originally Posted by fuzzerson

Taxes are voluntary...

http://images4.wikia.nocookie.net/__...ley_Snipes.jpg

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Redd Foxx also decided he didn't have to pay income tax, the IRS and courts decided otherwise as well, him living here in Vegas had more to do with the Hacienda giving him a show to pay his debts than actually wanting to live here.

With that said, if you want to stalk some sports people, hang out around the Cheesecake factory in Summerlin, you would be amazed at people who live around that area, mostly in Queensridge.

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Originally Posted by pg1067

I'm not sufficiently knowledgeable to answer the why/how questions. I do know that it depends on the tax laws of each state but that, if a non-resident earns income in State X, State X may constitutionally tax that income. Some of the how/why questions are discussed in the article that I linked above. For example:

"When a professional athlete plays an away game, he’s likely incurred a tax liability in the state he’s just visited. As mentioned earlier, because of the publicity that surrounds professional sports, tax auditors can easily learn how much athletes earn and where they are when they are earning it. This increased attention by state tax auditors has (somewhat falsely) led the media, the teams, and the fans to believe players are subject to special 'jock taxes.' In fact, nonresident professional athletes are subjected to income taxation under the principles generally applied to all nonresidents. They just make way more money than the typical taxpayer, so their issues get all the attention."

As to your own situation, it's possible that your employer had an obligation to withhold from your checks based on those other states' laws and that you had an obligation to file non-resident tax returns (and possibly pay taxes) in AZ and/or HI (even if you and your employer didn't know those obligations existed). I know that, where a portion of one's income is taxed in another state, one may be able to reduce one's California taxable income as a result, so may come out as a wash or one could even end up saving money since most other states' income taxes are lower. The difference, as the article suggests, is that (I assume) you're not a high profile person earning in the high 6-7 figure range, so the odds of someone like you getting tagged for this are probably negligible. But, like I said, I don't pretend to know all the ins and outs of this and am definitely not a tax guy.

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Thanks for the detailed reply. Definitely shined a lot of light on the matter for me. I appreciate it!

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Originally Posted by Crockett77

I worked in different states back in the day. Few weeks or a couple of months here and there. Didn't get taxed either, problem is I didn't make enough in that calander year to meet the state's minimum tax level.

Trust me, roll into Arizona 4 times a season, earn 200K worth of game checks, they will look for your you.

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That was one of the parts I don't get. I thought that state isn't paying them though but the AEG company which resides in LA I believe. So I didn't get why that would effect them in other states if their employer who pays them is in California.

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Originally Posted by Russ

they could go live in


(no income tax states)
Texas
Alaska
Florida
Nevada
South Dakota
Texas

But who would want to live in those states? LOL

ok, maybe Florida.

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Originally Posted by mrm55

I think the tax issue is offset by the desirability of living in SoCal.

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I moved back to Dallas about 6 months ago and not that this in any way replaces my home out there, but for what I was paying for my 800 sqft apartment in Santa Monica, I'm having a 4,000 sqft house built on a golf course.