Jonathan Kuminga turned down significantly more money from the Lakers to join the Timberwolves, but his decision came with one major financial advantage.
Kuminga agreed to a two-year, $12.4 million contract with Minnesota on Wednesday. Los Angeles was prepared to offer him a sign-and-trade deal worth at least $12 million annually over more than three years, according to ESPN’s Shams Charania.
The difference between the offers was already substantial, but Kuminga’s potential tax bill in California made the numbers even more interesting.
On a $12 million annual salary with the Lakers, Kuminga could have paid approximately $6.4 million per year in taxes, according to figures from California’s Franchise Tax Board.
His tax burden in Minnesota is projected to be closer to $3 million annually, according to the Tax Foundation.
That means Kuminga could save approximately $3.4 million per year in taxes by playing for the Timberwolves instead of the Lakers.
However, the tax savings don’t completely make up for the money he left behind.
Even after accounting for California taxes, Kuminga could have taken home approximately $5.6 million annually under the proposed Lakers contract. His estimated take-home salary with Minnesota is around $3.2 million.
In other words, Kuminga sacrificed roughly $2.4 million in annual after-tax income by choosing Minnesota.
The numbers make it clear that maximizing his earnings wasn’t the only consideration behind the 23-year-old’s decision.
Kuminga is expected to have a significant opportunity with the Timberwolves, while a move to Los Angeles would have placed him alongside another star-studded roster.
California’s taxes also aren’t exactly unfamiliar territory for Kuminga. He spent more than five seasons with the Warriors before eventually leaving Golden State and landing with Atlanta.
Now he’s headed to Minnesota on a much smaller contract than what was available elsewhere.
Kuminga may have avoided a massive California tax bill, but he also willingly walked away from millions of dollars in guaranteed earning potential to choose the Timberwolves.
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