The Seattle Seahawks’ front office is sounding the alarm that Washington state’s proposed “millionaire tax” could make it harder for the football team to sign free agents. But how convincing is that argument?
Washington’s new tax applies only to income above $1 million, generated from games played in Washington state, and not until 2028. So it affects a slice of earnings from home games a few years from now, rather than a whole paycheck today.
Most athletes’ salaries don’t flow through a single state’s income tax system. Player income is split across signing bonuses, base salary, and other payments that may be taxed differently.
More importantly, players don’t earn all their income in their team’s state. Under so-called jock tax rules, income is allocated across states where games are played. That dilutes the Seahawks-only effect of the new tax policy.
And if taxes were a decisive factor in free agency, we would expect franchise outcomes to reflect that. But two of Seattle’s NFC divisional rivals—the San Francisco 49ers and Los Angeles Rams—operate in one of the highest-tax states in the US, and they still seem to attract top talent.
None of this is to suggest taxes are irrelevant. But rather than a sweeping competitive disadvantage, the new policy is more likely to amount to a small difference in contract value for Washington athletes.
It’s often taken as read that taxes drive high-end talent away, whether in the C-suite or from an arena. Yet the impact of tax policies is often more nuanced. If marginal tax differences dictated outcomes, we would expect to see clear evidence by now—but we don’t. That should temper any early panic among Seahawks fans and stakeholders.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts analyzed clean-energy tax credit eligibility, a “Black Women Best” framework for reforming the federal tax code, and more.
The Exchange—It’s where great ideas on tax and accounting intersect.
Insights
Trump Tariffs Behoove Business to Plan Ahead to Reduce Cost Risk
President Donald Trump’s tariffs have created significant operational and compliance challenges across industries. In addition to sharply increasing costs, the unpredictability of tariff rates and implementation complicates long-term investment and planning for companies.
Spain Aligns Tax Law with Corporate Reality for Property Groups
The Spanish Supreme Court issued a judgment last month providing greater flexibility for business owners to structure their real estate and reduce local wealth and estate taxes.
IRS Standards on AI and Tax Preparation Would Protect Businesses
If the IRS doesn’t issue comprehensive federal guidance on artificial intelligence use in tax preparation, a patchwork of conflicting state rules will undermine business compliance and CPA professionalism.
Congress Should Make the IRS Treat Taxpayer Privacy as Mandatory
President Donald Trump is suing the IRS for $10 billion over the leak of his tax returns by a government contractor. The number made headlines. But the real story is that the law protecting taxpayers’ most sensitive financial information is nearly worthless.
Why the US Tax Code Needs to Catch Up With Crypto Reporting
The looming administrative problems caused for the IRS this year by cryptoasset transactions could be resolved by targeted, bipartisan crypto tax reform to reduce unnecessary and burdensome reporting requirements.
We Must Focus on Black Women to Reduce Inequity in the Tax Code
As nice as it is to celebrate Women’s History Month, if we want a brighter future for women, we need to forge tax policies that reduce inequity. This starts with policies that will help Black women, who stand at the intersection of gender and racial inequity in the economy.
Clean-Energy Tax Credit Deals Require Extra Compliance Checks
Renewable-energy developers and component manufacturers should ensure they are well positioned to preserve credit eligibility, secure financing, and maintain a competitive standing in the credit market.
Five Questions With Baker McKenzie Tax Chair Maria Eberle
Bloomberg Tax Insights & Commentary is featuring a recurring questionnaire of prominent tax professionals who are willing to share their thoughts about their work and the practice of tax these days. Today we feature Maria Eberle, chair of Baker McKenzie’s Americas tax practice group and a partner in the firm’s New York office.
Technically Speaking
California’s sales tax crackdown on luxury cars with Montana license plates shows its need to adopt a primary-use rule in place of its delivery-paperwork process for vehicle sales, Andrew Leahey argues in his latest Technically Speaking column.
“Dealers could be required to report sales to in-state residents regardless of delivery location, placing a vehicle on authorities’ radar and allowing them to verify compliance” using toll data and red-light camera records, Andrew writes, adding that statutory penalties could further reinforce such a system. Read More
News Roundup
Challenge to IRS Tax Credit Screening Tool Rejected on Appeal
A federal district court properly denied a preliminary injunction sought by two tax preparation firms that challenged the IRS’s screening program for a Covid-19 tax credit because the firms lacked standing, the Ninth Circuit held Tuesday.
KPMG’s New Global Leader Infuses Firm With AI, Operations Savvy
KPMG’s incoming global leader has a track record boosting fees and stewarding mergers among the Big Four accounting and advisory network’s smallest affiliates—experience that will serve the firm as AI and increasing competition threaten to shake up its business model.
UK Proposes New Reporting Rules for Small Company Transactions
Small companies should make detailed intra-company transaction reports to the UK tax authority, according to a government proposal Thursday.
Tax Court Navigates AI Misuse Rules for Self-Represented Filers
The US Tax Court is starting to weigh its own guardrails around artificial intelligence misuse amid the additional thorny challenges of a high proportion of self-represented parties and the need to shield sensitive taxpayer information.
Good Counsel
Mentoring can come from people you don’t expect, writes Paula Boggs, former general counsel at Starbucks Corp. A colleague in human resources tipped her off when she was negotiating her starting pay that she wasn’t asking for as much as a recently hired C-suite peer was getting.
Even younger colleagues can be mentors, Paula says in her latest Good Counsel column. In her recent work as the leader of a band, she says she gained valuable negotiation advice from a musician who was younger but who’d been in the industry for longer. Read More
Tax Management International Journal
Academic, Religious Groups Confront Unique Social Security Rules
Academic and religious organizations face unique and challenging Social Security rules, including statutory elections and important international considerations, requiring careful consideration to ensure compliance and protect employee benefits.
Global Tax Shifts Turn Transfer Pricing Into a Pivotal Strategy
Businesses that invest early in an integrated tax‑and‑transfer-pricing strategy will be best positioned to navigate whatever form the global minimum tax ultimately takes.
Tax Management Memorandum
Are Recordkeeper Security Guarantees a Fiduciary Minefield?
Retirement plan recordkeeper security guarantees aren’t a safe harbor: ERISA plan sponsors and fiduciaries should carefully evaluate recordkeeper security guarantees in the context of their legal duties and obligations to plan participants.
The New CAMT Does Not Meaningfully Alter Corporate Tax Outcomes
The new CAMT’s impact survey shows high compliance costs but little effect on corporate tax planning or revenue generation.
IRS Proposes First Operational Rules for ‘Trump Accounts’
Treasury and IRS propose rules for “Trump accounts,” covering setup, authorization, and pilot contributions, with further guidance pending.
Career Moves
McDermott Nabs Private Client Partner Tucci From Proskauer in LA
Peter Tucci joined McDermott Will & Schulte as a partner in its private client practice in Los Angeles, the firm announced Tuesday.
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