Wednesday, July 07, 2010

State Income Tax

Bill Bradley: "The absence of state income tax in Florida and Texas is a big reason the Miami Heat and Dallas Mavericks can be active in free agency.

Compare that to the New York Knicks, whose players have to pay combined state and city income taxes of 12.618 percent. That means Amar'e Stoudemire's five-year, $99.8 million deal with the Knicks is worth about $12 million less than if he had signed with the Heat.

While athletes are taxed by other states when playing road games, they come out well ahead if they live in Texas or Florida.
Yes, these Florida and Texas teams had to have salary cap space to get involved in this circus. Yes, they wanted to improve their rosters.

But think about this: There are five NBA teams in Florida and Texas. Those are the only teams without state income tax. All five are among the most competitive in the league.

The unintended consequences of taxation spread far and wide.
Personally, I'd be ecstatic if my Mavericks wound up with a Bosh, James or Wade. But after this bold move by Chicago, I think he'l be a Bull.


Gino said...

but whats the tax on asian imported viagra?

it is a known issue among those who negotiate for athletes, what the taxes are where they will be playing,etc... and contracts are structured accordingly.

with baseball, its not much of an issue. there is no salary cap, and the high dollar teams can afford to pay the difference.
but for some with caps, it actually allows them a highr defacto cap than what is stated.

Palm boy said...

Gino, probably just what you pay in shipping.

In the NBA at least, I think the tax structure may be an issue for teams, if only because over the last decade, the 5 teams in Texas and Florida have been consistently among the most competitive in the league.