SABR

Seidman: Traded Marlins affected by more than tax rates

From SABR member Eric Seidman at FanGraphs on November 14, 2012:

The Marlins and Blue Jays agreed to a blockbuster trade earlier this week that sent Jose Reyes, Mark Buehrle and Josh Johnson to Toronto. There are clear tax ramifications for everyone involved in the trade, and as an accountant who works in this field and consults with players and agents, I find it very interesting on a number levels.

However, what makes it more interesting than the average trade isn’t simply the tax rates of the countries, states and cities involved. Nor is it the effective state and city tax rates each team will experience — based on where they play spring training, the rates of their home states and cities, the rates of all other jurisdictions in which they will play and the amount of time spent in these jurisdictions. Per the effective rates, the difference between Florida and Ontario is reduced, but still substantial, since Florida has no state tax.

As I’ve explained here before, the specific state and city tax rates matter to an extent, but because of how the jock tax works, the effective rate is more telling. It’s for this reason that the AL West may soon become a big area of interest among free agents: it now features three teams without state or local taxes in the Astros, Rangers and Mariners. The Astros also spend spring training in the non-taxed state of Florida.

Even with the state and provincial tax ramifications, what piqued my interest the most with this deal is how Canada disallows certain allowable deductions in the United States.

Read the full article here: http://www.fangraphs.com/blogs/index.php/traded-marlins-affected-by-more-than-tax-rates/

This page was last updated November 15, 2012 at 12:53 am MST.

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