Ohtani's Contract Prompts California Controller to Ask Congress to Step In on Deferrals

By Bill Shaikin, Los Angeles Times (TNS)

Congress should narrow a loophole that could spare Shohei Ohtani from paying tens of millions in California taxes, the state controller said Monday.

The Dodgers last month signed Ohtani to a 10-year, $700-million contract, with Ohtani deferring $680 million until after the contract expires in 2033.

By that time, Ohtani could have returned to Japan or moved elsewhere outside California, where he might not be liable for state taxes on the deferrals. That could cost the state an estimated $98 million in tax revenue, according to the California Center for Jobs and the Economy.

“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,” Controller Malia 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.

“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. 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.”

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