When it comes to taxes, Toronto may be best choice for Pete Alonso

New York has the third-highest tax rate in the U.S. Combine that with the federal income tax rate of 37%, and Alonso could be paying around 48% in taxes. Canada's highest federal tax rate is over 50%, so on the surface, it might seem like New York is the better deal. But thanks to the income tax treaty between the U.S. and Canada, the rules are a little more nuanced.

Let's break it down using Alonso's hypothetical $70 million contract, which includes a $20 million signing bonus. Before diving into specifics, it's important to note that Alonsois a Florida resident, which is key since Florida has no state income tax.

Staying in New York:
If Alonso chooses to stay in New York, he would owe $25.9 million in taxes on the entire contract, plus an additional $2.3 million on the portion of the contract that's not covered by the signing bonus. As a Florida resident, he won't pay state taxes on the signing bonus, so he saves around $2.18 million. In total, his taxes in New York would come to about $29.2 million.

Signing with the Blue Jays:
In Canada, and specifically Ontario, Alonso will only be taxed for the days he spends working north of the border. The signing bonus would be taxed at a preferential 15% rate, which works out to around $13.65 million-assuming he spends about 40% of his time in Canada. He would still owe U.S. federal income taxes on the other 60% of his workdays, which comes to roughly $12.25 million. That means his total tax burden for playing in Canada would be about $25.9 million-about $3.3 million less than staying in New York.

The conversation around athlete taxation in Canada is evolving. Just last December, former Blue Jays Josh Donaldson and Russell Martin won a tax dispute with the Canadian Revenue Agency.

It's important to remember these numbers are just estimates-and incomplete ones at that. Other factors, like payroll taxes, property taxes, or a potential trade, could alter the total amount. But overall, playing in Canada could be the more tax-friendly option.

SOURCE - Sportico