31st January 2013
The taxes of professional athletes became incredibly complicated in the early 1990s, when aggressive state and local tax collectors began targeting them to pay non-resident income taxes. Technically, all employees who earn money for work done outside their home states have to pay non-resident taxes, but enforcement has focused on millionaire athletes with publicized work schedules to the extent is is commonly called the “jock tax.” Although ballplayers can’t get out of the state and local taxes they pay while on the road, where they play their home games can make a huge difference. California takes 13.3 percent on income above $1 million, but states like Florida, Nevada and Texas are among seven that take nothing.
I heard a report on the radio yesterday that Tiger Woods, by moving from California to Florida, saved about $7.5 million in taxes. That will pay for a lot of U-Hauls.