Cheer up, boys and girls of summer. Baseball spring training begins this month.
As a fan of both New York baseball teams since age 11 (my Mets fan pastor calls this “schizophrenic,” but I remain undaunted), I’m among millions who especially value those home-grown players who develop into stars and remain with one team for an entire career.
Think Mickey Mantle, Yogi Berra, David Wright, Lou Gehrig, Whitey Ford, Derek Jeter, Ed Kranepool, Joe DiMaggio, and a few others, and you realize what a small but beloved fraternity this is.
The departure of Mets-drafted, nurtured, and groomed ace pitcher Jacob deGrom left me disappointed, as he accepted an offer from the Texas Rangers for $185 million over five years. Such are the vicissitudes of free agency in modern Major League Baseball. The Mets quickly moved to sign Cy Young Award-winning pitcher Justin Verlander for two years, but still, the exodus of Jake, our home-grown kid, will sting for a while.
On the other hand, I was very pleased, five days later, that the 2022 “athlete of the year,” American League Most Valuable Player, and new homerun king Aaron Judge signed with the Yankees. His mind-blowing contract calls for $360 million in salary over nine years. To get their money’s worth, Yankee management gave him a second job, as the new team captain.
Judge grew up in northern California, rooting for the San Francisco Giants, and New Yorkers were nervous that Judge might take the lavish contract bait dangled by the darling team of his boyhood and move to the Bay Area. Judge was also a New York-signed-and-nurtured career superstar.
Why did deGrom leave and Judge stay? Presumably, there are real advantages each player saw in the organizations they signed with. Surely, Judge visualizes World Series rings during the nine years of his Yankees contract. And perhaps deGrom sees himself as the pivotal pitcher to lead the Texas Rangers into the post-season.
New York has more entertainment and culinary attractions than anywhere, and the Dallas-Fort Worth area has its own allures. But what else could these bright, world-class athletes have had on their minds?
My hypothesis: taxes. If deGrom had narrowed his choices to New York and Texas, consider his tax bill had he stayed. With New York Gov. Kathy Hochul approving higher marginal income tax rates in 2021, our state’s top rate swelled to 10.9 percent. New York City’s additional income tax rate is 3.876 percent, meaning that if deGrom chose to live in the five boroughs, his marginal New York City and State income tax bill would top out at a confiscatory 14.776 percent—or more than $27 million over five years, depending on deductions and tax incentives.
Texas has no income tax.
The National Bureau of Economic Research found that “high income taxpayers are more responsive to marginal tax rates” than other income groups. Could deGrom have concluded that on his own?
But Judge stayed. Does that rebut my hypothesis? Well, look at what might have factored into Judge’s calculations. By staying in New York, even if he chooses to live in the City of New York, his state and local tax bite will be the same 14.776 percent that deGrom faced, amounting to over $53 million over nine years, again depending on deductions, incentives, and other financial decisions.
But Judge wasn’t comparing New York with a “no-income-tax” state like Texas, Florida, or Tennessee. He was considering an offer from his birth state, which is run by extreme “progressives,” just like New York. Gov. Gavin Newsom just imposed an effective California marginal income tax rate of 14.4 percent, and if the Yankee captain had chosen to live within the city of San Francisco, he’d be hammered for another 1.5 percent of his income.
So had he signed with the Giants, Judge’s state and local tax bite, based on a marginal rate of 15.9 percent, would have grabbed over $57 million of his $360 million salary. Even to the game’s top player, $4 million is real money, as Everett Dirksen might remind us. Judge could buy the most opulent hot tub in the world, and by choosing New York over California, still have enough cash to start a foundation to help needy kids or homebound seniors.
Memo to Governors Hochul and Newsom: If you’d like to host a World Series parade during your term, it’s wise not to chase sports megastars (or anyone) out of your state with absurdly high taxes.
Will the last industrious New Yorker to leave, be she a power forward or he a modest store owner, please turn out the lights?
