Tanaka Will Lose More Than Half of $155 Million Yankees Deal to Taxes

Image: Tanaka Will Lose More Than Half of $155 Million Yankees Deal to Taxes

Friday, 24 Jan 2014 12:22 PM

By Lisa Barron

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Japanese pitcher Masahiro Tanaka may have landed a megamillion-dollar deal with the Yankees, but he will lose more than half of it to Uncle Sam.

Over the seven-year life of his contract, Tanaka will pay nearly $90 million of the $155 million he earns in taxes, reports Americans for Tax Reform.

That's because the 25-year-old will pay a combined marginal income tax rate of 56.1 percent to federal, state, and local governments, plus the Medicare payroll tax, according to ATR.

Tanaka's contract is the biggest ever for an international free agent and the fifth-largest deal for a pitcher, reports ESPN.

Had he signed a similar deal with the Arizona Diamondbacks or the Chicago Cubs, both of which were courting him, Tanaka would have kept an additional $12 million over the term of the contract since those two cities don’t impose income tax.

"While Tanaka is not your average employee, the real lesson to be learned here, one you won't see in the headlines, is that higher federal and state tax burdens can have a huge impact on employees and employment in a state," said ATR.

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