No WA State Income Tax Helps Former New York Yankee Pocket Extra $42 Million
The Seattle Mariners were able to offer former New York Yankees second baseman Robinson Cano $42 million more after-tax dollars to lure him to the American League West because they play in a state with no income tax.
When Cano signs his reported $240 million contract, the Jay Z client's after-tax pay will be worth that much more than what he would have received in New York, according to Robert Raiola, "a certified public accountant who specializes in sports and entertainment."
Bloomberg News that Cano top tax rate is 8.97 percent in New Jersey, where he currently resides. Cano intends to relocate to Seattle and become a resident of Washington, which has no state income tax. New York's best offer was about $175 million over seven years, and they would have had to offer him $265 million to match the after-tax pay offered by Seattle.
Had Cano re-signed with the 27-time World Series champions, he would have paid New York State taxes on 45 percent of his Yankees income, Raiola said, adding that he would have received a credit in New Jersey on those taxes.
With the Mariners, Cano will benefit from playing more than 70 percent of his games in jurisdictions that don’t have a state tax, including Texas. Seattle plays in the American League’s Western Division, which includes two Texas teams -- the Texas Rangers and Houston Astros. Washington voters rejected an income tax in 2010. States tax athletes based on days or games played within their borders. For the Mariners, Raiola said he assumed a state tax rate of 7 percent in the locales where athletes are subject to tax.
In Seattle, Cano will have to pay $504,000 annually in various state taxes compared to $2.2 million a year over the life of the contract in New York.
The five-time All-Star’s net pay would be about $12.8 million annually for 10 years with the Mariners, Raiola said. It would be about $12.3 million annually for seven years with the Yankees. That, combined with the extra three years of salary in Seattle, is a difference of about $42 million over the span of the Mariners contract.
The Yankees would have had to pay Cano about $265 million for him to keep the same amount that he will with Seattle, Raiola said.
Cano’s net pay over the life of his Seattle contract is about $128 million, Raiola said. His net pay over the life of the Yankees offer, he said, would have been about $86 million.