Quoting: palhal
I believe in the US, taxes are paid "where" you earn them....In Canada, people pay taxes "where they reside". So, players visiting and playing in California, pay state taxes for their days in California.
So, this bit of "where the team is located" doesn't mean all that much.
Technically, you can do both in US (if you want to pay for accountants). There are some exemptions that may move the needle a little. But we would be talking a thousand here, a thousand there. Bonus money is all “where you live” income (hence my example used minimal salary figures). With any lump income like that, parts of it are probably put into trusts, for which you’d then pay yourself maximum amount each year…if you spend more that limits, it gets taxed. But again, small figures…especially considering the same strategy would be used if you lived in Texas (to minimize federal tax).
In short, when talking $80-100 million contracts…you may be giving up a net $5-10 million more in high tax state/province.
(“It’s a myth” is not best argument against my point here, because it is real and an issue for some. It is, “there are trade-offs” that are unique for every player. Nylander may want to stay a Leaf…others may look at schools, prestige, family, weather, trajectory of team, etc. Toronto checks a lot of those boxes for many…and taking home $45m in Toronto vs $50 million in Dallas may not be that important).