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State taxes could play a factor in Cliff Lee choosing between Rangers and Yankees

Nov 4, 2010, 11:19 AM EDT

Cliff Lee Family

While speculation swirls about how much Cliff Lee enjoyed his time in Texas and how much his wife disliked her time in New York, an overlooked factor in his free agent decision-making could be state income taxes.

Darren Rovell of CNBC wrote a very interesting article examining the differences in taxes Lee would pay depending on his new home. Texas does not have a state income tax, but it does have something called a “Jock Tax” that would involve Lee paying approximately $2.25 million if he signed a five-year, $120 million contract with the Rangers.

However, if Lee signed the same five-year, $120 million contract with the Yankees and moved to New York he’d pay between $11 million and $15 million in state income taxes depending on exactly where he lived.

In other words, assuming Lee can get in excess of $100 million from either team any offer the Rangers make will be worth about 10 percent more to him than any offer the Yankees make. Whether or not an “extra” $10 million would be enough to sway Lee one way or another is obviously unclear, but it does suggest that the Yankees will have to clearly top the Rangers’ offer to get him. Of course, we probably knew that already.

  1. julietsdaddy - Nov 4, 2010 at 11:38 AM

    Poor poor greedy ballplayers.

    The same stories were posted about LeBron in the summer.

    I for one will not be duped into feeling bad for Lee when he will still make 90 million dollars either way.

    CNBC- always looking out for the rich and trying to make middle america feel bad for the elite.

    • ThatGuy - Nov 4, 2010 at 11:47 AM

      What part of either this post or the original story gave you the impression it was trying to make you feel bad for the athlete? It was simply giving the tax implications between signing in Texas or NY. If anything it was meant to give hope to Texas fans in that Texas can make an offer $15 mil less and still land Lee.

      • julietsdaddy - Nov 4, 2010 at 11:52 AM

        Just hearing about players deciding about where to play because of 10 million when they are making 100 million is a joke.

        I didnt believe Lebron went to Miami for the taxes and I dont think Cliff Lee will either. CNBC is a joke- thats what I am trying to say.

  2. apbaguy - Nov 4, 2010 at 11:50 AM

    Some of the tax burden is mitigated by deferrals and also by deducting the state tax from the federal taxes, though at Cliff’s level the impact is somewhat limited. But more to the point it is unlikely that the difference in the Yankees offer and the Rangers will only be $ 10M over the life of the deal. Remember that the difference in Sabathia’s deal from his nearest losing suitor was over $ 40M.

    And I think all offers will be so large that Cliff can use other quality of life criteria to make up his mind. I grew up in the country, but unlike Cliff and a lot of ballplayers, I never wanted to go back. But many of those guys love it. Everybody’s different, and he’ll have plenty of options to choose from, and plenty of money regardless.

    • rover27 - Nov 4, 2010 at 3:26 PM

      So Texas is one of those states that raises most of its revenue on the backs of the middle and lower income people. Sales tax, fees up the wazoo, etc.

      I mean, those poor rich people. It’s not like they haven’t gotten any tax cuts over the past 30 years. That’s all this disastrous “Trickle Down Economics” is about. What a joke!

      • nhuskerjj - Nov 4, 2010 at 6:22 PM

        Ok Mr. Liberal Progressive, you must have a degree in Economics. Texas taxes people that can afford the tax. The property tax and sales tax is some of the highest around. Be we have no state tax. If I rented I wouldnt have real estate tax. Quit letting CSNBC and Ed Shultz make up your mind as to how to think. Do some research. The Taxes here have never made any differnce whether we sign a player over another team. The heat is more of a factor than any taxation would ever be.

  3. BC - Nov 4, 2010 at 11:55 AM

    Good Lord, his wife is phenomenal!! Who on earth would throw beer at her??!?

    • Jonny 5 - Nov 4, 2010 at 12:16 PM

      She’s not “all that” now….. I’ve tossed things on better looking women before. That’s how we roll in the (856).

      • BC - Nov 4, 2010 at 12:24 PM

        No, we don’t roll that way in the (860). But I did end up getting a phone number and date one time by accidentally spilling a beer on a young lady. So maybe there’s creedence to what you’re saying.
        “Are you always this forward?”
        “Only with wet, married women.”

      • Jonny 5 - Nov 4, 2010 at 12:33 PM

        You DOG. Get off my mound!!! ;P

      • Utley's Hair - Nov 4, 2010 at 1:14 PM

        I disagree. I happen to think she is “all that.” She may not be the bag of chips, but she is “all that.” But that’s just how we roll in the 484/610/215/267.

    • Utley's Hair - Nov 4, 2010 at 12:33 PM

      Depending on the circumstances, location and possible outcome, I might.

  4. dsmaxsucks - Nov 4, 2010 at 12:02 PM

    When did the mania for discussing this non issue become the required sports dude talking point in contract negotiations. Simmons always mentions it (Lebron), Cowherd picks it up (jeter), now Aarons on it.

    Can we find the athlete who actually cites taxes as any sort of reason for picking a team before we all start lathering ourselves in tea party talking points. These guys have accountants far better than Darren Rovell, they pay state taxes for road games, and they have a bunch of money either way. People need to stop pretending these Ranger fan talking points aren’t just the same excellent arguments that kept Sabathia with the Brewers. Besides, Texas is really humid. And its full of Texans.

    • BC - Nov 4, 2010 at 2:03 PM

      They have better steak and ribs though.

  5. uyf1950 - Nov 4, 2010 at 12:05 PM

    Imagine, they paid this guy Darren Rovell of CNBC to write an article about the difference in state taxes between Texas & NY and how it might relate to Lee’s free agency. One of the other poster is absolutely correct there are things that can be done to mitigate the difference, the poster is also right the difference in offers if the Yankees are serious about signing Lee will be more then $10M. I’m also of the opinion that aside from the money difference the Yankees could/will offer, their is also the length of the contract. Don’t be surprised if the Yankees offer 6 years where the Rangers stop at 5. Now all of a sudden the difference could be $40M. That’s a lot of change to pass up.

    • Jonny 5 - Nov 4, 2010 at 12:30 PM

      Why does everyone ignore the fact that NYC smells like a dumpster sitting in the hot sun right outside of a chinese resturaunt called YU POO PALACE? This is a total game changer people!

      And uyf1950. The Yankees did want Roy Halladay too, And offered, but he signed 3 years with Philly, so although in theory you are right on the money, it might not make a damn bit of difference if Lee wants to remain. It’s a crapshoot right now really.

      • Utley's Hair - Nov 4, 2010 at 12:34 PM

        Dumpster…Yu Poo Palace…crapshoot…you really need to get some oat bran or Imodium.

      • Kevin S. - Nov 4, 2010 at 12:49 PM

        The Yankees were never able to make a contract offer to Roy Halladay. They might have made a trade offer to Toronto, but Doc was never a free agent – they couldn’t have spoken to him.

      • Jonny 5 - Nov 4, 2010 at 1:22 PM

        Ha!! I guess I talk too much sh!t afterall…..

      • Jonny 5 - Nov 4, 2010 at 1:38 PM

        Kevin, Here \/ \/ \/ my thoughts on that.

  6. uyf1950 - Nov 4, 2010 at 1:04 PM

    Kevin S. – You are absolutely correct. Halladay went right from the Toronto to Philadelphia and signed a 3 year extension with an option for 2014. The Yankees never had a chance to talk to Halladay. The only pitchers the Yankees were in the conversation with were Lee and Oswalt. In Lee’s case Seattle wanted to much from the Yankees (in prospects) considering he was going to be a free agent in a few months. The Yankees were never in any discussion about Halladay.

    • Jonny 5 - Nov 4, 2010 at 1:35 PM

      Kevin S is correct in a way. But The Yankees did offer up a trade, and with the Jays nowhere near being a contender they would have taken it if Roy wanted to go to NY. But he didn’t and his no trade clause had the Jays missing out on Yankee prospect Jesus Montero and I think Hughes too. And they accepted the Phillies deal because Drabek and a couple of low level prospects was sooo much sweeter of a deal? I don’t think so. And Roy said it after the deal went down “This is where I wanted to be” . The no trade clause is what got Roy to Philly, I’m fully convinced of it.

      • uyf1950 - Nov 4, 2010 at 1:49 PM

        Jonny 5 with all do respect, the Blue Jays would have never traded their prize player to an in division rival unless the Yankees blew them away with prospects and that was never going to happen, regardless of where Roy want to go or not. As for the comment about Halladay saying “This is where I wanted to be”. I’ve never heard a player that was traded say I never wanted to go to the place they traded me to, I can’t wait to get out of here. So I’d take that comment with a grain of salt.

      • Jonny 5 - Nov 4, 2010 at 2:08 PM

        With all due respect sir, if Roy wanted to be a Yankee, he would have been a Yankee. And NY would have beat the package the Phills offered, by “blowing away” the Phills deal. And as the story goes, “My son wanted me to be a Philly, he made the decision easy for me”. Or something to that effect. 3 years 60 million for Halladay or that insane contract to CC?? “Blown away” isn’t even the word for what they would have done against Philly IMO.

  7. uyf1950 - Nov 4, 2010 at 2:22 PM

    Jonny S – You’re wrong. The Yankees weren’t going to give away the farm, period. They didn’t for Lee wouldn’t have for Halladay. You’ve completely missed the point about Toronto not trading their prized player to an in division rival. The Yankee were more then happy to see Halladay go to the National League where at most they might face him once in inter-league play. Again as far as the comment about him saying he wanted to be in Philadelphia. I’d place as much credence in that comment as the one Damon made about Detroit and him always wanting to play in the motor city.

    • Jonny 5 - Nov 4, 2010 at 3:01 PM

      Whatever makes you feel better. But that doesn’t explain the 5 million articles that say the Yanks are going after Roy, which they did. I could link them all but it would take me over a year. And if you think for a minute that the Jays would never do such a thing… It sure as heck wouldn’t be the first time a non contender has traded to a division rival. I know it’s tough for Yankee fans to even fathom that a player just might not like your city, fans, team. This phenom does exist. Crazy right? And I’ll even go out on a limb here, which I don’t want, or like to do, because afterall this is a buisness and a game all in one. Lee will not become a Yankee for these very reasons.

      • uyf1950 - Nov 4, 2010 at 3:16 PM

        Jonny 5 – Have it your way. But send me 5 of those links out of those 5 million you’re talking about that shouldn’t take you to long. I’d like to read them. Try and make sure they aren’t written by the same person that thought because Lee bought boots in Texas that, that was an indication he was staying in Texas and would sign with the Rangers.

        I’ll check back later today in anticipation of receiving those links. Until then enjoy.

      • Jonny 5 - Nov 4, 2010 at 3:48 PM

        Just Google it. I did. You’ll find every spectrum of opinion on it. You’ll also find the Yankees indeed wanted Doc but hit a wall. No, we’ll never know exactly what that wall was that’s a fact, but I’m going with what i know. And that’s what i heard from Doc. Sure PR says he has to be sweet to his new team, but he was more vocal about his joy to be a Phillie than the norm. And who’s going to lie about their son to the media? Doc isn’t going to, that’s for damn sure. And knowing what the Yanks are capable of with endless dough, if he wanted to be a Yankee, so it would have been. I mean c’mon, the Jays were desperate, and they know they aren’t going to top the Yanks any time soon.

      • uyf1950 - Nov 4, 2010 at 4:06 PM

        Jonny 5 – I love it, call a posters bluff and how does he reply “Just Google it I did”. You’re the one that said there were millions and it would take all year. Now it’s just a matter to “Google It”. I guess you can’t supply even 5 sites. Since it’s so easy I’ll wait for you to provide the 5 sites, after all you’re the one that said they exist.

      • Jonny 5 - Nov 4, 2010 at 4:38 PM

        See, and before that last post, I had no idea you were a weenie. Thanks for clearing that up. If ignoring the ability of Google makes you feel better, it’s cool. But remember it’ll still be there when you’re over it.

      • uyf1950 - Nov 4, 2010 at 5:15 PM

        That’s what makes this a great country. We’re all entitled to our own opinion. Enjoy.

  8. poreef - Nov 4, 2010 at 2:53 PM

    Not to put too fine a point on this non-fact coming up again:

    So long as you don’t spend too much time in your team’s state, you can declare to be a resident of another state.
    You pay taxes on your pro-rated salary based on where the game is played.

    So, for all your income, you are taxed at the rate appropriate to the laws of your residency state. For each individual game, you are additionally taxed at rates appropriate to the laws of the state in which the game is played.

    Any given state’s tax laws aren’t really a big issue when you earn so much money while out of state. Cost and style of living will determine where players sign unless they have bad agents or accountants. These guys live 6 months on the road anyhow. A Yankee will declare residency in Arkansas if they like the Ozarks and 5th Avenue if not. Even “true” Yankees.

    • uyf1950 - Nov 4, 2010 at 3:06 PM

      poreef – exactly, that’s why Jeter has his permanent residence as Florida. To mitigate the taxes. With the money he will be making tax attorneys will find all sorts of ways to limit the amount of taxes he pays. I have no doubt that will be part of the Yankees presentation as well when the time come and show the difference in taxes between Texas and NY are not as great as people think.

  9. willmose - Nov 4, 2010 at 4:47 PM

    I sure that Cliff Lee is a man of such character that he will pass up $29 million per year from the Yankees and sign with Rangers for $15 million per year so he doesn’t have to pay state income tax. Of course, taxes do enter into it, but 75% more from the Yankees will play bigger role. My guess is that Lee will sign with the Rockies because the school system is better.

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