How Much Will Pujols Pay in Taxes?
I appeared on “McGraw in the Morning” on KTRS today to discuss my recent commentary about Albert Pujols’ economic value (you can listen to the interview here). We got into a discussion of how much Pujols would pay in taxes on his new salary, assuming he eventually negotiates a contract with the Cardinals that is to his liking. If Pujols’ contract is for $30 million annually, he will pay in the neighborhood of $12,450,000 on his salary.
Pujols falls into the top federal tax bracket with a 35 percent marginal rate, so his federal tax bill will come in a little below $10.5 million. (It’s lower than that because of the lower rates he pays for the first few hundred thousand dollars and his ability to write off his Missouri income tax on his federal tax return.) The state of Missouri’s take is easy to determine because it is a flat 6 percent, clocking in at $1.8 million. The Saint Louis earnings tax is for 1 percent of income, but it only applies to games he plays in Saint Louis, so it will be half of 1 percent in his case, or $150,000. (He will have to pay earnings taxes in other cities that have them, like New York City and Kansas City, for the games he plays there, but if I were to try to tabulate his tax bill exactly, it would be absurdly complex, and I’d demand to be paid like his accountant.)
In short, it’s a bit of an exaggeration to say that Pujols might make $30 million a year, because after paying the various taxmen, he will end up with closer to $17 million — or less than 60 percent of his gross income.