Biography & Early Wealth Journey
"There was a team out in California, I think everyone can pretty much figure out who that was. There was a three-year offer guaranteed on the table. I don't think it's any secret on how much money you get taken out of your pocket when you go to California. There was a lot of factors that went into the three-year deal. It was definitely enticing. It definitely made the decision a lot harder to come back here, but once Arizona got to kind of the number that they did, it just made a lot more sense to come back here."
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That other offer was from the San Diego Padres, who were giving Kelly $40 million over three seasons. Sure, it was spread out over an extra season, but Kelly would have received the same amount of money…at least, in terms of pre-tax earnings.
Primary Income Streams & Multi-Million Contracts
Arizona has a flat 2.5% state income tax rate. California has a graduated-rate tax based on the amount of income being taxed. For anything above $742,954, the tax rate is 12.3%. And to add insult to injury, anyone making $1 million or more pays an extra 1% in payroll tax.
If he signed with the Padres, Kelly would be paying $5,300,116 in state income taxes over the duration of the deal. With his Diamondbacks deal, he'll owe $1 million in state income taxes. That's a total of $4,300,116 more going into Kelly's bank account.
This isn't the only time we've seen a player try to avoid paying California taxes. Shohei Ohtani's record-setting $700 million deal includes tons of deferred money; he could very well be retired and living outside of the state by the time he earns it.
Per Spotrac, Kelly has made about $36.6 million throughout his career so far. He's 37 years old, so this is likely one of the last contracts he'll sign as a major leaguer. He's trying to maximize the amount he gets to keep.