In a statement released Monday, Controller Malia Cohen said Congress should narrow a loophole that could spare Ohtani from paying tens of millions in taxes.
"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," Cohen said. "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.
"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. 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."
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The Dodgers signed Ohtani to a 10-year, $700-million-dollar deal, with Ohtani deferring $680 million until after the contract expires in 2033.
If Ohtani moves before that time, it could cost the state an estimated $98 million dollars in tax revenue.
"What we are seeing right now is a billionaire being able to legally defer paying taxes on his income, which is okay. What I'm saying is we need to look at that and introduce a cap," said Cohen.
California's budget revenue depends heavily on high-income taxpayers like Ohtani. The budget funds essentials like healthcare and education.
In the last five years, the state has lost $5 billion from high-income earners leaving California, according to the California Center for Jobs and the Economy.
"When those high-income earners leave, our state budget feels it," said Center for Jobs President Brooke Armour. "There's only about 8,000 taxpayers in California who pay about 24% of state income tax. That's a huge burden on those people, and so when they leave, we feel it."
During Cohen's interview with ABC7, she suggested a cap of possibly 30% on those deferred payments.
"When you become super wealthy, there are rules that are created to protect you, and all I'm saying is that perhaps we need to reexamine these rules," she said.
California is currently facing a $68 billion budget deficit. The Dodgers declined to comment at this time.