Congress has cut federal funding for public media — a $3.4 million loss for LAist. We count on readers like you to protect our nonprofit newsroom. Become a monthly member and sustain local journalism.
Shohei Ohtani’s Record Dodgers Contract — And Deferrals — Has California Officials Talking Tax Reform
Shohei Ohtani of the Los Angeles Dodgers is seen before an NFL game between the Los Angeles Rams and the New Orleans Saints at SoFi Stadium on Dec. 21, 2023, in Inglewood.
(
Ryan Kang
/
Getty Images
)
The number was certainly attention grabbing: $700 million.
That was the amount of money it took for the Los Angeles Dodgers to sign two-way baseball sensation Shohei Ohtani this December, the largest contract in North American sports history.
The contract caught the attention not just of sports fans but the person who signs the checks for California state workers, and now could be the catalyst for tax reform.
“This is big and I think if we continue to ignore it and allow it to persist, that it's going to become a very big problem for the state government,” said California state Controller Malia Cohen. “But we are going to need kind of an all hands on deck to begin to address this matter.”
Support for LAist comes from
The problem is that Ohtani’s 10-year contract pays him only $2 million a year, deferring $680 million until after his time with the Dodgers — and possibly his California residency — is over.
If Ohtani collects that money after returning to his native Japan, California would lose an estimated $98 million in tax revenue from him, according to Cohen.
"It comes at a time when we are dealing with a $68 billion dollar deficit here in the state of California,” Cohen said. “And so, I'm waving the flag because as the state Controller and also chair of the Franchise Tax Board, I'm concerned. I'm concerned about the impact on future California revenues."
Cohen said she's calling on Congress to consider closing the loophole that allows massive amounts of deferred income because federal tax law supersedes state tax law. It has been part of employment contracts in varied fields for decades, but Cohen said her concern is that Ohtani's could start a wave of similar deals in sports.
"Don't get me wrong, I'm a sports fan and I wish Ohtani and the Dodgers well — however, full disclosure, I am a Giants fan,” Cohen said. “I just think that there should be a cap on deferrals … just like there are limitations for everyday taxpayers."
She acknowledged there's not much that can be done about the Ohtani deal, so any reforms would be aimed at protecting tax revenue against future contracts.
Support for LAist comes from
As Editor-in-Chief of our newsroom, I’m extremely proud of the work our top-notch journalists are doing here at LAist. We’re doing more hard-hitting watchdog journalism than ever before — powerful reporting on the economy, elections, climate and the homelessness crisis that is making a difference in your lives. At the same time, it’s never been more difficult to maintain a paywall-free, independent news source that informs, inspires, and engages everyone.
Simply put, we cannot do this essential work without your help. Federal funding for public media has been clawed back by Congress and that means LAist has lost $3.4 million in federal funding over the next two years. So we’re asking for your help. LAist has been there for you and we’re asking you to be here for us.
We rely on donations from readers like you to stay independent, which keeps our nonprofit newsroom strong and accountable to you.
No matter where you stand on the political spectrum, press freedom is at the core of keeping our nation free and fair. And as the landscape of free press changes, LAist will remain a voice you know and trust, but the amount of reader support we receive will help determine how strong of a newsroom we are going forward to cover the important news from our community.
Please take action today to support your trusted source for local news with a donation that makes sense for your budget.
Thank you for your generous support and believing in independent news.
Chip in now to fund your local journalism
(
LAist
)
Trending on LAist
-
The U.S. Supreme Court lifted limits on immigration sweeps in Southern California, overturning a lower court ruling that prohibited agents from stopping people based on their appearance. -
Censorship has long been controversial. But lately, the issue of who does and doesn’t have the right to restrict kids’ access to books has been heating up across the country in the so-called culture wars.
-
With less to prove than LA, the city is becoming a center of impressive culinary creativity.
-
Nearly 470 sections of guardrailing were stolen in the last fiscal year in L.A. and Ventura counties.
-
Monarch butterflies are on a path to extinction, but there is a way to support them — and maybe see them in your own yard — by planting milkweed.
-
With California voters facing a decision on redistricting this November, Surf City is poised to join the brewing battle over Congressional voting districts.
Best of LAist