Danny Ainge’s son asks Gordon Hayward to consider potential Mass. ‘millionaire’s tax’ before leaving Utah
Despite his father, Tanner Ainge has good reason to want Gordon Hayward to stay in Utah.
As a candidate in Utah’s special election to replace Rep. Jason Chaffetz, Ainge (the second son of Celtics general manager Danny Ainge) could potentially face backlash if Hayward ditches the Jazz for the Celtics. And in a tweet Thursday, he urged the All-Star forward to consider a potential change to Massachusetts’s tax code before leaving Utah.
https://twitter.com/tannerainge/status/880279099809316864
“Something to consider over next few days,” Ainge, a Republican, tweeted at Hayward, linking to an article about the 2018 ballot question to implement a so-called “millionaire’s tax” in Massachusetts.
The proposed constitutional amendment would add a 4 percent annual tax on all income above $1 million. Massachusetts currently has a flat 5.1 percent state income tax. If passed, the amendment would mean high-earners would pay a 9 percent tax on all income after their first $1 million.
A recent WBUR poll found 81 percent of voters say they would support the measure.
But how much of a difference would Massachusetts’s millionaire’s tax make for Hayward?
First, Utah also currently has a flat 5 percent state income tax.
Hayward made more than $16 million in base salary during the 2016-17 season and is expected to be offered a max contract this offseason. Under the projected salary cap, that would be worth $128 million over four years, which is the longest contract the Celtics can offer (due to NBA cap rules, Utah can offer Hayward an additional fifth year).
If the millionaire’s tax is passed, the additional 4 percent tax on an average $32 million contract (applied to all income after the first $1 million) would mean Hayward would be docked $4.9 million more in Massachusetts than he would be in Utah over four years.
However, the millionaire’s tax would not apply until tax years beginning on or after January 1, 2019. So if Hayward signed with the Celtics this season, the tax would only apply to his final two years of his max contract, during which he would earn about $32.7 million and $34.4 million, respectively.
Applied to just those two years, the millionaire’s tax would mean Hayward would earn roughly $2.7 million less in Massachusetts over four years than he would if he was earning the same amount in Utah.
This, however, doesn’t account for Hayward’s “Bird rights” — which allows Utah to offer their own players more money. According to league rules, Hayward could receive a five-year deal with 8 percent annual raises if he re-signs with the Jazz, compared to just the four-year deal with 5 percent raises he could receive from another team.
New max contract projections
0-6 years experience
$144M over five years
$106M over four years7-9
$172M
$128M10+
$201M
$149M— Dan Feldman (@DanFeldmanNBA) June 22, 2017
In the end, this means the Jazz can offer Hayward a five-year, $172 million deal (averaging $34.4 million a year), while the Celtics can offer him a four-year, $128 million deal. So hypothetical difference due to the millionaire’s tax pales in comparison to the amount of additional money — roughly $44 million — Utah can already offer Hayward due to NBA rules.
All that said, Hayward’s first free agency meeting will reportedly be in Miami, where there is no state income tax. So both Ainges should be hoping that state tax considerations don’t factor into Hayward’s ultimate decision.
