CNBC: Cliff Lee and Taxes in Texas
This is interesting. You wonder why more players don't think of this type of thing.
over 1 year ago
Big50
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They assume he lives in New York state or New York city
But they don’t consider the case of Lee living in Connecticut or New Jersey and then working in New York.
Thank you Cliff Lee!
You pay taxes based on your work location
I believe.
"I wanted to go out there and punch Julio" - Ron Washington
Then what's the point of Jock Taxes
or the emphasis on changing residency in the article?
Thank you Cliff Lee!
by DerekSTheRed on Nov 4, 2010 11:50 AM CDT up reply actions
Well the Jock Tax
is significant because your home team drives half of it. I don’t get the whole changing residency thing. Honestly, most athletes could afford to live in Texas, or Florida, or Nevada, or Alaska, or any of the other tax free states, and get an apartment or hotel or whatever and not establish residency in the state they play in. There may be a tax guy in here, but I thought where you worked drove income taxes, not where you live. Where you live tends to drive property taxes.
"I wanted to go out there and punch Julio" - Ron Washington
you'll still pay taxes in your home state
and file nonresident tax returns in other states you may in during the year, provided that you meet the filing requirements.
but at most athletes income levels, it’s pretty easy to meet the minimum
by kevinkinsler on Nov 4, 2010 12:12 PM CDT up reply actions
It's actually both
You are generally taxed where you work. So you play for the Yankees, you are going to pay NY income taxes on half your salary regardless of where you live.
You may also owe taxes in the state where you are a resident, although you could get a credit for taxes paid in other states.
Additionally, NY even imposes a commuter tax on people that live out of NY and commute into the city to work.
by Darrell McKown on Nov 4, 2010 12:49 PM CDT up reply actions
then you get taxed in both locations
Connecticut gives you a credit for NY taxes though
by kevinkinsler on Nov 4, 2010 12:11 PM CDT up reply actions
In any case,
Lee will do what is best for him and his family.
That said, I think if the Yanks offer 5/$120, we have to be at least 5/$115. None of this “oh we don’t have a state income tax” crud. We have to show Lee that he is valued just as much here, or even more so here, than in New York. So, IMO, if the yanks offer 5/$120, we match it. If it gets up toward $130 to $150 (i know, way on the high end, but just in case it does happen. we’ve seen stranger things), we keep our offer lower than the yanks by $5 to $10 million. Or I’d have an option for a 6th year to make the total contract worth a max of $145 if he stays a 6th year.
This team do what it do ~ Ron Washington
I didn't see a reason to go out there 'n ack-a-fool ~ Ron Washington on the Ben and Skin show
I think the tax thing is meaningful
but probably only for about $1 million / year (even if the savings is $2 million / year). Lee would definitely make up for that difference in extra endorsements in NYC. So if the Rangers can get within 5 million of the Yankees offer, the tax thing (and proximity to home, etc) is sufficient to say the Rangers have the better offer.
But I don’t think anyone is suggesting that the Rangers can low ball Lee by 30 million and think he’ll still sign here.
Go Rice Owls!
Again, the cost of living (CPI) is roughly 60% higher in NYC
While this won’t be the big selling point on a contract, it can be a contributing factor in Lee’s decision. The reality is that $20 million per year in Dallas-Fort Worth CPI Dollars is roughly the same as $32 million per year in the NYC metropolitan area.
Add in culturally that Texas probably is more similar to his resident home in Arkansas, and that it is much closer to his family than New York City, and that becomes a selling point.
Also, Mrs. Lee mentioned that Lee might be better appreciated in Texas. Basically that is a big fish in a small market pond approach so to speak, but who is going to chose Cliff Lee for endorsements in the New York market over some of their other established highly paid Yankees?
I don't think cost of living scales to that level
You make 50K in NY or Cali, you’re renting a dump. You make 50K in DFW, you’re considering buying a small house.
You make $10 million after taxes in NY, you live in a great apartment in the city or a big house in Westchester. You make $10 million in DFW, you live in a big house in Highland Park or wherever.
Either way, your quality of life is pretty good. And you still have $8 million / year to invest, buy a ferrari, go on two month European vacation, buy a boat, whatever. That stuff does scale with location.
Go Rice Owls!
Linear weights.
Why doesn’t it surprise me that you’re pointing out the flaw in their use?
If Brad Pitt is playing Beane who do you want playing you?
JD: Eddie Guardado.
by GhettoBear04 on Nov 5, 2010 12:03 PM CDT up reply actions
Shhh, I don't think we're allowed to mention anything but reasons why a smaller contract would go further HERE!
Lee would definitely make up for that difference in extra endorsements in NYC.
I don't see Lee being as marketable in NY as in Texas
Here he has the huge outdoorsman angle he could capitalize on. Cabelas, Bass Pro, Academy.
NYC is huge, though.
And Taco Bell probably isn’t going to have a Ranger eat a chalupa any time soon.
NYC has a lot of other celebrities competing for advertising dollars
If Lee wants to be the big fish in the little pond, he’ll choose Texas (money being equal). If he doesn’t mind being a small fish in a huge pond, he’ll choose NYC.
Thank you Cliff Lee!
This and I can see the desperate yankees going as high as 150 as well.
We cant rely on the taxes stuff if the offer begins right after 100mil once it starts getting into Yankees territory then yeah we go 10mil or so less and then rely on the taxes arguement to close the deal.
More players don't do it because their agents don't always want what's best for them
they want the biggest “announced contract value” so that other potential clients can see that.
Greatest Inventions Ever? 1. TiVO, 2. Boobs, 3. Baseball
And this means that teams need to re-emphasize with players
various factors that agents may need to gloss over.
That's always been the issue but I think players buy into it/want it
Various players have deferred a crap load of money just so they can claIm their total contract was for X amount.
"You promised me, Eckstein, that if I followed you, you would walk with me always. But I noticed that during the most trying periods of my life, there have only been one set of prints in the sand. Why, when I have needed you most, have you not been there for me?" David Eckstein replied, "Because my little legs had gotten tired, and you were carrying me." And I looked down and saw that I was still carrying David Eckstein.
Then he grounded out weakly to second.
My first thought too
Plus, agents get paid from whatever that number is in the contract (I would imagine), not the after taxes amount. So there is even more incentive for the agents to downplay the tax aspect.
And why does Cliff Lee care about the MLBPA again?
I want someone to tell me why they have huge influence
Go Rice Owls!
It has some influence
MLB/MLBPA somehow blocked the A-Rod for Manny trade Texas had negotiated. It’s control over FAs is likely less.
"You promised me, Eckstein, that if I followed you, you would walk with me always. But I noticed that during the most trying periods of my life, there have only been one set of prints in the sand. Why, when I have needed you most, have you not been there for me?" David Eckstein replied, "Because my little legs had gotten tired, and you were carrying me." And I looked down and saw that I was still carrying David Eckstein.
Then he grounded out weakly to second.
well, in that case ARod was offering to take a pay cut
I can imagine union rules prohibit that.
Go Rice Owls!
Yep
He was talking about taking a 20 million dollar pay cut or something like that. The MLBPA has no say in where a player goes in FA and how much they want to sign for.
By 2028, Mark Teixeira will be in the HOF.
"I am one of the biggest Texas Ranger fans out there but I'm also one of the smartest. Deal with it."
-The Outlaw
I have a buddy in AAA
And I’ve talked about this quite a bit with him. He said that from the moment he was drafted they start stressing the importance of stuff like this. If you want to be in the good graces of the Union you listen to them. I don’t want to get into in great detail, but as much as I hate it, I think this plays a pretty large role.
The scouting report on Salty is that he’s a pampered, curly-haired motherfuck who didn’t earn his stripes. He has trouble throwing the ball back to the pitcher, claims to be a switch-hitter and is piss-poor in the clutch.
Have fun!
by oc on Jul 31, 2010 4:17 PM CDT
I agree
and I think this cannot be understated.
For a player, you have a number of pressures pointing towards you taking the biggest deal. The unions, family, agent, ex-teammates and friends, etc.
They like to pull out the “Leaving Money on the Table” card, and the “Hometown discount” card.
Lee is in control, but he still has to answer to all of these people. In many ways its much easier to either say, “Its not about the money” and sign where you please, or just simply take the best deal. That’s why I don’t fault Teixeira going to the Yankees. It was the best deal, and he took it. It made the most people happy, and to be frank, I don’t think he cared where he went. If he had any preference, it would have been Baltimore, but they probably weren’t interested. (certainly not at the price he ended up commanding).
I think Texas is going to have to match what NY offers, but privately they will have an advantage if they do. They might not even have to do that if things with Jeter keep getting in the way.
LSJ (on Dallas Braden): I know him, and I think he's a psychotic lowlife.
Braden's grandmother: And I think calling him that is an insult to the psychotic lowlife community.
I'm sure there is an us vs them mentality
Unions get by in this country by brainwashing people the instant they get in, so I doubt it is different in the most powerful union in the universe.
But again, we’re not talking about whether they’d be upset if Lee took a 25% lower offer in Texas. Clearly they would be upset. We’re talking about ~$1 million / year to go to a place where he can end up netting that differential. As cynical as everyone wants to be about this, it is not simply an ebay auction.
Cliff Lee won’t sign in Texas if NY is offering $3-5 million more a year or gives him an extra season. But no agent or union or buddy is going to convince him to go to NY if it means less take home pay and living in a place he or his wife doesn’t want to live just because the bigger number makes these other random people happier.
Go Rice Owls!
My guess to your question...
is because when you’re making that much money it really doesn’t matter a whole lot.
"The only good is knowledge and the only evil is ignorance."-Socrates
from what I've seen
this is precisely the case
by kevinkinsler on Nov 4, 2010 12:33 PM CDT up reply actions
I find it funny
that when the money difference hurts NY, people say “when you’re making that much money it doesn’t matter”
but when the money difference helps NY, people say “little bits of money always matter”
Go Rice Owls!
First rule of life
the money always matters.
It’s not just simply NY offer less taxes though.
Not saying it doesn't matter at all...
just that it matters a little less when you are making that much.
"The only good is knowledge and the only evil is ignorance."-Socrates
Yeah
My understanding was that this was a standard Ranger pitch that never seemed to work with anyone…
Yep, been hearing this for years.
'Waiting for a girl and she gets me into fights
Waiting for a girl we get drunk on Friday night'
Colin Cowherd talks about this almost nonstop (when it helps his argument)
"You promised me, Eckstein, that if I followed you, you would walk with me always. But I noticed that during the most trying periods of my life, there have only been one set of prints in the sand. Why, when I have needed you most, have you not been there for me?" David Eckstein replied, "Because my little legs had gotten tired, and you were carrying me." And I looked down and saw that I was still carrying David Eckstein.
Then he grounded out weakly to second.
Any chance he figures to make a lot more in advertising, etc.
if he’s in NYC?
"Look at our current situation with that camel f$%ker over in Iraq. Pacifism is not something to hide behind."
Discussed already above
And I’m behind the idea that he’d do better as a large fish in a small pond that a tiny fish in an enormous pond. Cliff Lee is already a god here. People I work with who never knew a single player on the Rangers a year ago know exactly who Cliff Lee is. Lee is one bad New York start away from being hated by half the city.
The scouting report on Salty is that he’s a pampered, curly-haired motherfuck who didn’t earn his stripes. He has trouble throwing the ball back to the pitcher, claims to be a switch-hitter and is piss-poor in the clutch.
Have fun!
by oc on Jul 31, 2010 4:17 PM CDT
interesting
"Look at our current situation with that camel f$%ker over in Iraq. Pacifism is not something to hide behind."
by Walter Sobchak on Nov 4, 2010 7:36 PM CDT up reply actions
Disagree?
There’s a ton of people at work that have made fun of me for years for having a bunch of Rangers bobbleheads on my desk and now they’re always asking me about Cliff Lee. In New York, he’s just another ace and most of their fans think he’d be their # 2 pitcher. Is CC killing it in endorsements right now? Maybe, but I can’t think of many he’s done. Maybe he’s bigger locally.
The scouting report on Salty is that he’s a pampered, curly-haired motherfuck who didn’t earn his stripes. He has trouble throwing the ball back to the pitcher, claims to be a switch-hitter and is piss-poor in the clutch.
Have fun!
by oc on Jul 31, 2010 4:17 PM CDT
I never disagreed
I find it an interesting point
"Look at our current situation with that camel f$%ker over in Iraq. Pacifism is not something to hide behind."
by Walter Sobchak on Nov 5, 2010 3:02 PM CDT up reply actions
cut that cute sh!t out, Mike - I'm starting to like you
"Look at our current situation with that camel f$%ker over in Iraq. Pacifism is not something to hide behind."
by Walter Sobchak on Nov 8, 2010 12:16 PM CST up reply actions


































