Massachusetts’ ‘millionaires tax’ impacts how agents negotiate with the Red Sox
BOSTON — In the November elections, Massachusetts voters approved a “millionaires tax,”bumping up state income taxes in 2023 from 5 percent to 9 percent on annual income over $1 million. Baseball players pay state income tax based on the location of their games, meaning that Red Sox players pay Massachusetts state income tax on half of their salaries.
News of the increase came as a shock to Kiké Hernández.
“Well, [expletive] me. This is news to me,” Hernández said by phone. “I’m surprised my financial guy hasn’t reached out to me to tell me that. I will 100 percent, as soon as I hang up with you, reach out to him.”
Hernández agreed to his one-year, $10 million deal for 2023 in September — before the new tax had been passed. It was not a factor in his contract talks.
But this offseason, agents who have been negotiating with the Red Sox say they’ve been factoring the millionaire’s tax into the calculus when contemplating offers. The team, said multiple agents, is now lumped in with teams in California and New York in needing to outbid clubs in more favorable tax environments (particularly Texas and Florida, where there’s no state income tax) to present offers of equal value.
“Every good agent is going to factor that in,” said one agent. “It’s a big deal. It’s potentially millions of dollars in the deal. It absolutely factors into our decision-making process.”
The Red Sox have said they’re open to considering moving Hernández back to the middle infield as they contemplate alignments with Xander Bogaerts having signed with the Padres. How is Hernández preparing for the season?
“As we stand right now, as the team stands on paper, I understand that what’s best for the team is for me to be in center field. So I’m preparing to play center field every day,” said Hernández, whose favorite position is shortstop. “But I haven’t thrown away my infield glove.” Hernández said he continues to take ground balls.
Hernández had been working out with Bogaerts in Arizona in the weeks leading up to his decision to sign with San Diego. While sad to see a friend and All-Star contributor leave, he couldn’t begrudge Bogaerts’s decision.
“As much as it hurts to lose that guy, I’m also really happy for him because he’s a friend,” said Hernández. “These people become your family. If your family member gets $120 million more in one place than another, you get happy for that person.”