Jonathan Kuminga has agreed to a two-year, $12.4 million contract with the Minnesota Timberwolves, a decision that reportedly saved him a substantial amount in taxes compared to a larger offer from the Los Angeles Lakers. Shams Charania reported that the Lakers' sign-and-trade proposal would have provided Kuminga with more than $12 million per year for at least three seasons.
Despite the higher annual earnings from the Lakers, Kuminga's move to Minnesota allows him to avoid California's high tax rates. Calculations indicate that Kuminga would have owed approximately $6.4 million annually in taxes on a $12 million salary if he had joined the Lakers. His tax liability with the Timberwolves is estimated to be around $3 million per year on his current salary.
This difference in tax obligations translates to an estimated annual saving of $3.4 million for Kuminga by choosing the Timberwolves. However, even after taxes, the Lakers' offer would have resulted in Kuminga earning roughly $5.6 million per year post-tax, compared to approximately $3.2 million annually after tax on his Timberwolves deal. This suggests Kuminga left an estimated $2.4 million after taxes on the table by not accepting the Lakers' proposal.
The financial implications indicate that compensation was not the sole driving factor behind Kuminga's decision to sign with Minnesota. His choice may reflect a preference to avoid California taxes, a situation he is familiar with from his tenure with the Golden State Warriors, where he played for over five seasons. If the Timberwolves do not achieve championship success, Kuminga might reconsider his decision to forgo the larger potential earnings from the Lakers.