January 28, 2014

The price of liberal cosmopolitanism

And no, I’m not being merely figurative here:  “Pitcher Loses $12M to Taxes by Signing with Yankees Instead of Diamondbacks, Cubs”:

However sweet this $155 million dollar deal seems, the reality is that Masahiro Tanaka will lose almost $90 million over the seven-year life of his contract with the Yankees

As reported by ESPN, the New York Yankees have signed Masahiro Tanaka to a 7-year contract worth $155 million, earning an estimated $22.1 million per year. According to ESPN, Tanaka’s contract is the largest ever for an international free agent and the fifth-largest deal for a pitcher.

However, as sweet as this $155 million dollar deal seems, the reality is that Tanaka will lose almost $90 million over the seven-year life of his contract with the Yankees.

In addition to the Yankees, Tanaka was also being courted by the Arizona Diamondbacks and the Chicago Cubs. Unlike New York City, the cities of Phoenix and Chicago do not impose a city income tax.

Had Tanaka chosen a contract with the Diamondbacks or the Cubs, he would have saved almost $12 million over the life of his contract. Even if these teams offered him millions less, he could’ve come out ahead.

Instead, Tanaka chose New York, where the state and local rates are some of the highest in the country. By choosing to sign with the Yankees, Tanaka automatically forfeited almost $12 million in taxes that would have been saved had he signed with the Cubs or Diamondbacks.

And of course, we all know that Chicago, at least, recoups what it doesn’t charge in city income tax with all sort of regulatory burdens, tolls, usage taxes, etc., so that at the end of the day, the lure of playing for the “lovable losers” — who aren’t very lovable, and whose fans have been burnished and cleansed in mythology while in reality they are among the most belligerent and boorish (sorry, but this observation comes to me from a Chicagoan, not to mention an infamous rant from a former Cubs manager) — is very similar to deciding to take a giant pay cut to have your life micromanaged by a corrupt political machine, and then throw in wind and ice and snow as a constant soul-sucking bonus.

To a Japanese player, the thrill of playing in Yankee pinstripes may have outweighed the financial advantage of playing for a team in Arizona.  Perhaps Tanaka is already financially secure, and he — like others before him — is drawn to the remarkable history of the Yankees. And that’s a personal decision, one I don’t begrudge him.  Too, New York may remind him of Tokyo in its bustle and scope, also an appeal.

Still, the point remains:  the cost of living in the land of the nannystate, formerly run by a billionaire anti-soda czar with a tyrant streak the size of his ego and now run by a practically open communist, has its enormous costs.  And when all the infrastructure and security and restructuring laid by Giuliani is finally pissed away in crony deals and yet more entitlements that compensate for the loss of jobs due to confiscatory taxes and over-regulation, playing in the New Bronx Zoo — a recasting of the Carter years — may not look so glamorous any more.

And moving to Connecticut and commuting is probably not as sexy as it sounds, even if David Letterman makes it look relatively painless.

Posted by Jeff G. @ 10:43am

Comments (17)

  1. Do you mean to convey that the true price is practically never seen, despite its enormity, since that true price is spread so very widely and deeply across millions of people who cannot be regarded individually?

  2. Wonder if Tanaka also knows that he is essentially subsidizing Martin Scorsese’s “Wolf of Wall Street,” which received the a 30 percent tax credit from New York State. Which is “In effect, New York State taxpayers paid for a third of its $100 million in production costs.” (http://tinyurl.com/ljxh6pk). Well, only some of the NY taxpayers paid for it, right?

  3. Lee Elia.
    Greatest rant of all time.

  4. I thought the same thing when Albert Pujols (PBUH) left us for the Angels. He would’ve made more money staying in STL because taxes are so much less across the board. Plus, he gave up being heir apparent to Stan Musial, which I thought was a bad move personally. But then, you guys in Denver don’t have to see him as often anymore, so there’s that.

  5. “And moving to Connecticut and commuting is probably not as sexy as it sounds, even if David Letterman makes it look relatively painless.”

    NY makes you pay income tax for every day you work in their state even if you are not a resident. Not sure how much of an advantage it is to commute from CT. And don’t even think of having a second home there – they’ll just tax you as if it’s your permanent residence (http://tinyurl.com/k5c34ma).

  6. Tom W., Earl Weaver could bring it, too.

  7. PA charges you an annual fee for having a job, as well. Add in state, local, borough taxes and they get you coming and going.

  8. Though I would interject in fond memory of our Earl, there’s a great difference between a profound Aristophanean self-satire and an angry frustrated outburst the like of Elia’s.

  9. Speaking as a Cub fan, that rant might carry more weight if Lee Elia had ever managed to have a winning record.

    Here’s something about Phil Mickleson’s 61% tax rate last year.

  10. Those “tax free zone” commercials from NY crack me up. “Relocate your business to NY tax free, don’t worry, we’ll get it out of our current residents and your employees”

  11. Each year I have to sign off that I don’t plan to work more than 14 days in New York, or else they’ll deduct NY state and NYC taxes from my paycheck. Despite the fact that I live in Ohio.

    It’s like the Monty Python “man on the street” interview: “To boost the British economy, I’d tax all foreigners living abroad”. Our socialist brethren in the aptly-named Empire State have taken that idea to heart. Eff’em.

  12. I’ve been advocating that for years. I mean, what’s the point of having a military larger than the militaries of all other nations combined * if we can’t demand tribute from Europe, the Middle East, Japan, and whoever else we’re “protecting”?

    I clever government would be able to turn a profit with the US Military, ‘s all I’m sayin’.

    * May not actually be the case, but close enough for rhetorical purposes.

  13. Must admit, this is an amusing diversion, despite it being my money they’re fighting over in the deBlasio/Cuomo faceoff, set up by deBlasio’s tale of two cities campaign promise to bump taxes on incomes > $500K. Symbolic because it wouldn’t make a difference, because he doesn’t have the power to raise taxes, but effective nonetheless at creating the image of the people’s mayor.


  14. I have a customer in Michigan that I don’t know if I will visit again because the state sent me tax forms after being there for two days last year. Unfreaking real.

    Oh, and here’s a story about Peyton Manning’s tax rate for the Super Bowl being 100%.

  15. Your link, she’s broken Charles.