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Posted by Barry Margolin on November 30, 2006, 1:41 am
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>> I read in the newspaper that should baseball player Vernon
>> Wells sign with the Texas Rangers for roughly $16 million
>> to $18 million per year, he would save roughly $10 million
>> / year in tax savings considering he makes his principal
>> home in Texas and Texas has no state income tax.
>>
>> Currently Vernon Wells plays baseball in Canada. Can a pro
>> sports player not keep his tax advantage by designating his
>> principal residence in Texas but at the same time playing
>> for a sport's team outside the state of Texas?
> Income is taxed under two scenarios. One being your state
> of residence taxing all income regardless of where it's
> earned. The other, the one that hits home, is that tax is
> imposed by the state in which it is earned. There's a good
> chance that for every away game, taxes are due to that state
> (where the game is played).
>
> So, unless there is a reciprocity agreement between states
> (NY and NJ come to mind, but then no one actually plays in
> NY anymore), an athlete's income would be subject to the
> same rules for any non-resident earning income in that
> state.
>
> And that just doesn't apply to athletes, but artists,
> entertainers, musicians, etc, as well as their crew. So the
> coaches, paid cheerleaders, road crew, and staff are also
> filing dozens of state returns each year.
Is this only true for occupations where you spend a
significant portion of your time away from the state of your
main office? If I normally work in Massachusetts, but my
company sends me to work in the California office for a
couple of weeks, I don't expect to pay California taxes for
the earnings during those weeks. An athlete probably only
spends 3-4 days per year in any particular away game state,
less than a ordinary executive traveling to another company
office for a week or two -- why does the athlete have to pay
taxes in those states, but not the executive?
However, baseball players in northern states *do* spend
several months in the south for spring training -- it would
make sense for them to pay taxes in the southern state
during that time.
--
Barry Margolin, barmar@alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***
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