Cumberland Times-News

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November 22, 2012

Obama tax increases could factor in MLB negotiations



Team executives and agents wandered into the Agave Sunset lounge at the resort where the general managers' meetings were held in Indian Wells, Calif. Four of the six flat-screen televisions were showing election coverage, with the other two turned to sports.

President Barack Obama's victory over Mitt Romney was of as much interest to baseball's money men as the game scores, given the millions of dollars routinely guaranteed in player contracts these days.

As free agents negotiate deals this offseason, tax policy is an area that comes up along with the usual issues. Some players are wrangling for as much money as they can get before the end of the year to avoid a take hike in 2013.

"Front-loading would make sense if at all possible as tax rates will definitely go up on January 1st on all high-income taxpayers," agent Greg Genske said in an email. "The only question is HOW MUCH will the rates increase????"

This much is known for now: Starting Jan. 1, there is an additional 0.9 percent Medicare tax on wages above $200,000 for individuals and $250,000 for married couples filing jointly under the federal Affordable Care Act, a rise to 2.35 percent.

In addition, the Bush tax cuts are scheduled to expire at the end of the year, which could raise the highest marginal federal tax rate from 35 percent to 39.6 percent — although a deal between Obama and Congress could change that.

Oakland Athletics general manager Billy Beane figures agents will be on top of the changes — but the results of negotiations about the so-called fiscal cliff are unpredictable.

"I think if you're hopping around the potential of tax reform, you're probably chasing your tail," Beane said. "If they can predict when something's going to happen, then they're much further ahead than the lawmakers."

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