Not a math major but-
Time on job- 2years
salary- $400K(x2)- $800K
Tax rate- 35%
$800K- 35%= $520K after taxes
$520K after taxes - $500K contract buyout
= $20K net
After taxes and contract buyout looks like JC will net about $20k for 2yrs work. seems like a good contract to me.
The Buyout would be tax deductable, so take it off before you compute the taxes.
Buyouts are un-American and reek of desperation. You want someone to stay? Pay them. If you can't afford them, don't resort to some punitive gimmick.
contract law is American as apple pie
Exactly. The buyouts work in both directions. If Ohio wants to fire a coach early, they pay a buyout. If the coach wants to leave early, he pays a buyout. For that matter, if you want to change cell service providers early, you probably pay a buyout. They are not uncommon or un-American at all.