Fishing (or should I say swinging) for a Better Income Tax State?
Mike Trout of the Anaheim Angels has signed a record 10-year, $360 million contract extension. Trout will now receive $426.5 million over the next 12 years for his services. According to ESPN, he is the highest paid athlete in North America.
Assuming that Trout is a resident of California, he could save quite a bundle by moving his residency to a state with no income tax such as Florida. He would still be required to pay California income tax on his duty days (home games, etc.) worked in the state.
A small side note is that spring training games are free of state income taxes. Florida, of course, is a tax-free state, and Arizona doesn’t tax games until the regular season. Also, signing bonuses can be structured to be state tax-free.
Living in a tax-free state, he would pocket almost $20 million more than if he were a California resident. While mere pocket change to someone receiving over $400 million dollars, $20 million dollars is still “real” money (enough that I’m sure Mr. Trout has been advised to seriously consider having a tax-free state residency).
Aren’t we glad we live in Florida? Now if we can only get someone to pay us 400 million dollars. PLAY BALL!