Washington’s New ‘Millionaires’ Tax’ Could Cost Smith-Njigba $12M
Seattle Seahawks wide receiver Jaxon Smith-Njigba recently signed a record-setting contract extension. His deal, which totals $168.6 million, surpasses the previous record held by Cincinnati Bengals star Ja’Marr Chase. However, a new tax law in Washington state could significantly impact Smith-Njigba’s actual earnings.
Washington’s New ‘Millionaires’ Tax’
The newly proposed tax legislation in Washington targets individuals earning over $1 million annually. This tax, set at 9.9%, could dramatically affect Smith-Njigba, who is expected to pay approximately $12.3 million in state income tax over the term of his contract, which runs through 2031.
Comparison with Ja’Marr Chase
- Smith-Njigba’s contract: $168.6 million
- Chase’s contract: $161 million
- Estimated state tax for Chase: $4.5 million over five years
- Estimated state tax for Smith-Njigba: $12.3 million over his contract
Chase, playing in Ohio, benefits from lower state income tax rates. The state legislature has recently decreased its income tax rate, allowing him to retain a larger portion of his earnings compared to his Seattle counterpart, who will face higher taxation. While Smith-Njigba’s deal is more lucrative on paper, the tax implications mean that Chase may take home more money in the long run.
Implications for Athletes in Blue States
The difference between states with high and low income tax rates raises questions about the financial landscape for professional athletes. States like California and New York also impose high taxes on their wealthy residents. This can deter incoming talent and affect existing athletes’ decisions on their futures.
Challenges for Seahawks
The Seattle Seahawks may face challenges in retaining talent due to the new tax structure. General Manager John Schneider has noted that the lack of state income tax was previously an advantage in recruiting players. The financial strain imposed by this new tax could complicate the team’s salary cap management and their ability to compete with teams from states with no income tax.
As the landscape evolves, Smith-Njigba’s situation serves as a critical example of how state policies can directly impact player earnings in professional sports. The outcome could reshape contract negotiations for many athletes in Washington and similar states.
