Understand if I release a player, i would eat his contract. But in this case I am moving a major leaguer to the minors and it says he will not accept the assignment but will become a free agent. given those circumstances, would i still eat his salary? that doesn't seem fair.

You do

There's really no way to get out of paying a contract other than trading him on having him claimed on waivers. Players with tenure have rights. It's fair to them. If he thinks he can land a big league job, he can refuse to be demoted. You still have to pay him him whether he stays on your big league roster, gets released, plays in your minors, etc. If you were going to demote him, obviously he's not an integral part of your team, unless you were hoping to be able to shuffle him up and down. I would just bite the bullet and release him if you don't have big league plans for him.