Effect of A.B. 2088 on Elite recruits

[GojiraCane]

Please, no politics on this. Just bringing up the bill itself. A.B. 2088 is under consideration in the California legislature, and it would apply a wealth tax to anyone who spends more than 60 days within the state. There are a couple of significant items to note:

1) Anyone who spends more than 60 days in the state is taxed, for any reason. If you are vacationing from Ireland or Germany to avoid the winter - the tax applies. If you are getting extended medical care at a California hospital it applies. If you are a top quarterback from Texas attending USC, it applies
2) The tax extends for ten years AFTER you leave the slate (although it falls with each passing year). Your hypothetical USC quarterback who goes to the NFL and plays the next decade in Texas now has to pay an income tax for the next ten years to the state of California.

Again, leaving the politics of this aside, what effect does this have on recruiting? Obviously most recruits would still go, but I have to think it has an impact on USC’s ability to pull in elite recruits.

 

[Artist Formerly Known As]

They’ll have minimal income. I guess the likeness money could throw a monkey wrench in that, but I’m sure they can work around it.

The taxing after they leave the state is unconstitutional and isn’t possible to really enforce.

 

[Brains]

Please, no politics on this. Just bringing up the bill itself. A.B. 2088 is under consideration in the California legislature, and it would apply a wealth tax to anyone who spends more than 60 days within the state. There are a couple of significant items to note:

1) Anyone who spends more than 60 days in the state is taxed, for any reason. If you are vacationing from Ireland or Germany to avoid the winter - the tax applies. If you are getting extended medical care at a California hospital it applies. If you are a top quarterback from Texas attending USC, it applies
2) The tax extends for ten years AFTER you leave the slate (although it falls with each passing year). Your hypothetical USC quarterback who goes to the NFL and plays the next decade in Texas now has to pay an income tax for the next ten years to the state of California.

Again, leaving the politics of this aside, what effect does this have on recruiting? Obviously most recruits would still go, but I have to think it has an impact on USC’s ability to pull in elite recruits.

I believe it will have a slightly negative effect on recruiting, by virtue of making things more costly and complicated.

This is really dumb stuff.

 

[Empirical Cane]

Please, no politics on this. Just bringing up the bill itself. A.B. 2088 is under consideration in the California legislature, and it would apply a wealth tax to anyone who spends more than 60 days within the state. There are a couple of significant items to note:

1) Anyone who spends more than 60 days in the state is taxed, for any reason. If you are vacationing from Ireland or Germany to avoid the winter - the tax applies. If you are getting extended medical care at a California hospital it applies. If you are a top quarterback from Texas attending USC, it applies
2) The tax extends for ten years AFTER you leave the slate (although it falls with each passing year). Your hypothetical USC quarterback who goes to the NFL and plays the next decade in Texas now has to pay an income tax for the next ten years to the state of California.

Again, leaving the politics of this aside, what effect does this have on recruiting? Obviously most recruits would still go, but I have to think it has an impact on USC’s ability to pull in elite recruits.

EXCELLENT observation. Likely they will have some sort of legislated exemptions a mile long.

They are targeting Oracle's Ellison and Tesla's Musk and even Joe Rogan types. Aren't they even trying to make it retroactive to ensnare folks who have already moved out? I can't imagine it gets upheld at SCOTUS (although a given it will to whatever court CA AG takes it up with).

What about Philip Rivers or Grappapolo?? The entire Raiders organization?

Kevin Durant???

It gets very sticky in a hurry doesn't it.

 

[TC@ne]

Just my opinion but I think it’s within the realm of possibility that they exclude full-time students from this.

Even California should have enough common sense not to treat students/student-athletes the same as FTE.

Selfishly, I hope they don’t and we get some west coast blue chips.

 

[jakeman1]

I would seriously reconsider going to a team in New York or California. Going after taxes after you leave is unconstitutional.

 

[SpikeUM]

I am NOT a lawyer, but do have a number of wealthy clients from high tax states, and I can assure you the states go after ex residents with a vengeance. They are ruthless and essentially extort money from the ex taxpayer (state tax courts rule almost always in favor of the state). And 60 days is actually a longer time than some jurisdiction use. So for example, NYC is only 10 (maybe 20) days.

 

[SpikeUM]

Also, there is currently a case before SCOTUS on a related topic - can states (like Taxachussets) still tax New Hampshire residents who now work from home but were formerly at their Mass office.

 

[RVACane]

This thread has to get moved.

 

[SpikeUM]

Just my opinion but I think it’s within the realm of possibility that they exclude full-time students from this.

Even California should have enough common sense not to treat students/student-athletes the same as FTE.

Selfishly, I hope they don’t and we get some west coast blue chips.

Some of the NIL $ may be large for star players. Also, if they are getting paid as a professional, could their scholarship money be taxed as well? It can be argued they are no longer FT students but semi pro athletes. And before you laugh, the budget shortages in the bigger blue states are mind boggling, they are desperate for revenue. As it is California, NY and NJ are BRUTAL chasing former taxpayers.

 

[Artist Formerly Known As]

I am NOT a lawyer, but do have a number of wealthy clients from high tax states, and I can assure you the states go after ex residents with a vengeance. They are ruthless and essentially extort money from the ex taxpayer (state tax courts rule almost always in favor of the state). And 60 days is actually a longer time than some jurisdiction use. So for example, NYC is only 10 (maybe 20) days.

I just don’t see how it’s enforceable unless said person still has financial interests in that state.

 

[SpikeUM]

I just don’t see how it’s enforceable unless said person still has financial interests in that state.

I have an executive client who lives and works in Mass but had to travel often for business to NYC, and thus paid a hefty NYC tax. After he changed jobs and both lives and works in Mass, NYC still came after him hard, and he ended "Settling" with for a hefty sum, even though it was complete bull****. NY Tax court is an extortion racket.

 

[Fluffhead]

I have an executive client who lives and works in Mass but had to travel often for business to NYC, and thus paid a hefty NYC tax. After he changed jobs and both lives and works in Mass, NYC still came after him hard, and he ended "Settling" with for a hefty sum, even though it was complete bull****. NY Tax court is an extortion racket.

The states are an absolute pain in the *** to deal with too. I’m in a group with a number of other tax directors in my industry and the a large number of companies in this list just do not allow for remote employees in California, NY, Illinois (local municipal rules), and a few other states. Covid has been an absolute thorn in the side.

I can’t imagine how California will possibly get this through the court system untouched, especially the retroactive part. At a certain point, companies will just leave. You already see the number of people and companies leaving high tax states to places like Texas, Florida, etc.

California is also trying to pass a tax on companies where highest paid employees make over 100x more than the lowest.