California official wants Congress to change tax code to limit Shohei Ohtani’s deferred money

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California Controller Malia M. Cohen wants Congress to change the tax code to cap deferred payments, a change that could ensure the state is owed more money from Los Angeles Dodgers star Shohei Ohtani.

Cohen made the request four weeks after the two-way star and the Dodgers agreed to a record $700 million, 10-year contract that contains $680 million in deferred payments due from 2034-43. If Ohtani is not living in California at the time he receives the deferred money, he potentially could avoid what currently is the state’s 13.3 percent income tax and 1.1 percent payroll tax for State Disability Insurance.

“The current tax system allows for unlimited deferrals for those fortunate enough to be in the highest tax brackets, creating a significant imbalance in the tax structure,” Cohen said in a statement Monday. “The absence of reasonable caps on deferral for the wealthiest individuals exacerbates income inequality and hinders the fair distribution of taxes. I would urge Congress to take immediate and decisive action to rectify this imbalance.”

Cohen’s statement was first reported by the Los Angeles Times.

Ohtani’s deal has the potential to save $98 million in state tax, according to the California Center for Jobs and the Economy, a public benefit corporation that aims to provide information on job creation and economic trends.

Cohen became controller last year. She was president of San Francisco’s Board of Supervisors in 2018 and ’19.

“Introducing limits on deductions and exemptions for high-income earners promotes social responsibility and contributes to a tax system that is just and beneficial for all,” she said. “This action would not only create a more equitable tax system, but also generate additional revenue that can be directed towards addressing pressing important social issues and fostering economic stability.”

Reporting by The Associated Press.


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