Regular readers of Tax Foundation reports know that we publish estimates of the distributional impact of federal tax changes: that is, we estimate how a tax reform might affect the after-tax incomes of taxpayers at...
- The Tax Policy Blog
- Bryce Harper Promoted to Double-A Ball in Pennsylvania, R...
Bryce Harper Promoted to Double-A Ball in Pennsylvania, Reduces His Income Tax Burden
Bryce Harper made a splash in baseball headlines on the Fourth of July when he was promoted within the Washington Nationals' minor league system from the Single-A Hagerstown Suns straight to the Double-A Harrisburg Senators. In making this promotion, the management let Harper entirely bypass the "High-A" team, the Potomac Nationals. This is good news for Nationals fans, as it looks like Harper might make his major league debut sooner than expected.
While this certainly seems like a big move for the 17-year-old Harper, he ought to now take a step back and consider the tax implications of his step up. In moving from Maryland to Pennsylvania, he moves from a state with a top income tax bracket of 5.5% (and an average local income tax rate of 2.98%) to a state which boasts a home-run flat income tax of 3.07% (and an average local income tax rate of 1.25%).
Let's run the numbers: Harper was the first overall draft pick in 2010 and he plays under a five-year, $9.9 million contract. Only half of Harper's salary will be subject to Pennsylvania income taxes (the other half will be subject to the tax structure of every state that he visits on away games*), but even with those caveats, the decision to move to Pennsylvania will save him almost $39,000 per year in income taxes.
If Harper were to serve his entire five-year contract period playing for the Harrisburg Senators that amounts to about $194,000 less in Pennsylvania state income taxes.
The one thing that Harper should not do under any circumstances is move up to the majors. If he moves to DC to play for the Nats he will be subject to their top income tax bracket of 8.5%. That would mean over $40,000 in extra income taxes per year, or $201,000 over five years.
*Note: When running these calculations, it is important to remember that professional athletes and businesspeople are subject to "jock taxes," which means that they must fill out an income tax form and pay taxes in every state where they render services. For a traveling baseball player, this means that roughly one-half of his income is subject to income taxes in other states. The calculations above represent how much money Harper stands to save on his "home game" income taxes only, and do not account for his tax burden to other states.
For more on income taxes, click here.
Get Email Updates from the Tax Foundation
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.
Recent Blog Posts
Related State Articles
- Lunch Links: Speaker Ryan Lays Out Vision for Tax Reform; Compromise Part of Latest New Jersey Tax Proposal; Pennsylvania Legislators Target Reduction of 40 Percent E-Cigarette Tax; Rundown of Marijuana Ballot Propositions in Five States
- Lunch Links: Beverage Industry Sues to Prevent Soda Tax in Philly; Chicago City Council Imposes Hefty Water/Sewer Tax to Aid Unfunded Pension Liability; TF Models Effects of Past Tax Legislation
- Lunch Links: Republican VP Candidate Pence Releases Tax Returns; Germany's Finance Minister Calls for European Tax Cuts; Philadelphia Downgraded by Moody's for Perilously Low Cash Fund Balances
- 1 of 61
- next ›