The Houston Astros are hated because they cheated. The Dodgers don't cheat. Outside of Los Angeles, however, they are a little more hated every day.
The supply of money seems endless. So does the All-Stars line. But deferred contracts are what could irritate haters the most.
The defending World Series champions have strengthened their roster with a series of “play now, pay later” deals, all in accordance with the collective bargaining agreement, and all of them giving the Dodgers a modest reduction in their luxury taxes. And so, the haters ask, can anyone stop the Dodgers?
Josh Becker would like that. He is a senator from California, a Democrat from Menlo Park. The Dodgers have deferred more than $1 billion in salaries over the past five years. Every dollar of deferred wages could be a dollar the state can't tax.
“The Dodgers are exploiting that loophole,” Becker told me. “It was never intended for anything remotely like this.”
The loophole is this: Under federal law, if you earn your salary in one state and retire in another, you may not need to pay income taxes on the salary you defer for retirement.
That puts California at risk of losing up to $138 million in revenue due to the Dodgers' postponements — $90 million on Ohtani's contract alone, should he return to Japan or move to another state after his contract expires.
“It's exploiting something that was intended for people with pensions of $20,000 or $25,000… people who have a small amount of pension, later in life, as an actual retirement,” Becker said. “That's what it was meant to be.
“We established a system. Other people respect him. And you're basically avoiding taxes that other people have to pay. It is basic justice.”
In December 2023, the Dodgers signed Ohtani to a 10-year, $700 million contract, with $680 million deferred beyond the life of the contract. Four weeks later, state Comptroller Malia Cohen said the contract illustrated the need for Congress to limit the amount of money that could be deferred without being subject to taxes.
“This action would not only create a more equitable tax system,” Cohen said in a statement, “but would also generate additional revenue that can be directed toward addressing important pressing social issues and fostering economic stability.”
Last March, Becker introduced a bill urging Congress to “establish a reasonable limit on deferred compensation.” The first line of the bill: “WHEREAS, in December 2023, the Los Angeles Dodgers baseball team signed a 10-year, $700 million contract with pitcher and hitter Shohei Ohtani.”
The bill passed the state Senate but died in the Assembly; Becker withdrew the bill once he realized it would not pass.
California's income tax rate for top earners is 13.3%, the highest in the country. It would make financial sense for players and others to retire to states like Florida and Texas, where there are no state income taxes.
Among the concerns Becker said he heard about his bill: Wealthy executives, not just players, benefit from such deferred compensation.
“They shouldn't use it either,” he said. “Let's close the legal loophole.”
It's not just about Ohtani or the Dodgers, Becker said. It's about taking advantage of the attention on Ohtani and the Dodgers to try to reform the tax law.
Becker said he might reintroduce his bill. Your timing could be better. The bill basically asks Congress to make some people pay more taxes. There is a better chance of the Colorado Rockies winning the World Series this year than if Congress passed (and President Trump signed) such a bill.
“If anything, they are focused on reducing corporate taxes, rather than people paying their fair share,” Becker said.
Becker represents a district in the San Francisco Giants' territory, but he grew up in Philadelphia and remains a Phillies fan. He doesn't really blame the Dodgers. Blame Congress. Shhhh, but he kind of admires the Dodgers.
“The Dodgers,” he said, “are building some kind of dynasty there.”
