State Controller asks Congress to step in on deferrals for the Shohei Ohtani contract

California’s top fiscal officer on Monday urged Congress to take “immediate and decisive action” to restrict the ability of high earners to defer income – and cited Los Angeles Dodgers superstar Shohei Ohtani’s $700 million contract as an example of how California could lose millions in tax dollars.

“The current tax system allows for unlimited deferrals for those fortunate enough to be in the highest tax brackets, creating a significant imbalance in the tax structure,” Malia Cohen, the state’s controller, said in a statement Monday. “The absence of reasonable caps on deferral for the wealthiest individuals exacerbates income inequality and hinders the fair distribution of taxes. I would urge Congress to take immediate and decisive action to rectify this imbalance.”

Ohtani, 29, signed a record-setting 10-year contract with the Dodgers that allows the all-star pitcher/slugger to collect $2 million per year and defer the remaining $680 million until after 2034. Soon after the contract details were confirmed, some questioned whether Ohtani could escape California taxes if he is no longer living in the state or country when the deferred payments began.

According to a calculation by the California Center for Jobs and the Economy, it’s possible for Ohtani to save $9.8 million per year in California taxes, a total of $98 million over the duration of the contract, with the deferred agreement in place.

Cohen is aiming her sights on limiting deductions and exemptions for higher earners, contending it would create a more equitable tax system.

“Introducing limits on deductions and exemptions for high-income earners promotes social responsibility and contributes to a tax system that is just and beneficial for all,” she said. “This action would not only create a more equitable tax system, but also generate additional revenue that can be directed towards addressing pressing important social issues and fostering economic stability.”