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Thursday, February 3, 2005

Trade me and pay me

When an athlete for a team in a state without income tax gets traded to a state with a high tax, the athlete’s take-home pay can drop dramatically.  This is one of the motivations for no-trade clauses in contracts.

When baseball slugger Carlos Delgado, who knows about high tax bills from his 12 seasons in Toronto, signed a four-year, $52 million contract with the Florida Marlins, taxes were on his mind.  There’s no state income tax in Florida.  But he didn’t insist on a no-trade clause.  Instead, the Marlins agreed to a provision under which if he gets traded to a team in a state with an income tax, the Marlins will have to kick in enough extra money so that he’ll wind up with the same net pay.

One result is that it will be cheaper for the Marlins to trade him to, say, the Houston (no tax) Astros than the New York (high tax) Yankees.

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From the ContractsProf Blog: When an athlete for a team in a state without income tax gets traded to a state with a high tax, the athlete’s take-home pay can drop dramatically. This is one of the motivations for no-trade... [Read More]

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Comments

I guess that means the Yankees are doomed.

Posted by: pgl | Feb 10, 2005 2:03:12 PM

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