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A hidden free agent factor: Tax uncertainty

By November 26, 2012

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Players in high demand on the free agent market and the teams that are bidding typically wait until some comparable players go off the board, so their negotiating position can be a little firmer.

But, according to a report on NBCsports.com, there's another factor -- the uncertainty of the federal income tax rate next season.

Every single player in Major League Baseball is in a high federal tax bracket -- the minimum salary next season is $490,000. With the Bush tax cuts set to expire at the end of the year, some players might even decide to sign early and get some money up front in order to avoid the uncertainty and the higher rates, according to the report.

And another factor that's always in play is state income tax. A player moving from a state such as Florida or Texas (which has no state income tax) to California (10.55 percent) has to pay considerably more.

However, anticipating the negotations in Congress over the next month is a bit like predicting the winner of the 2013 AL East. It's only an educated guess.

I think if you're hopping around the potential of tax reform, you're probably chasing your tail," said Oakland A's GM Billy Beane in the NBC story. "If they can predict when something's going to happen, then they're much further ahead than the lawmakers."


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