The Homa Files

Talk about having your cake and eating it.

LeBron gets Miami in the winter instead of Ohio, gets a sure-shot at a title and, oh yeah, saves $12.5 in state income taxes … almost enough to cover the first wave of Obama’s tax hikes.

That’s win-win-win.

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In a July 1 blog post, the New York Post warned that “dysfunctional lawmakers in Albany” could cost the state a chance to bring the coveted athlete to New York.

“If LeBron James goes to the Miami Heat instead of the [New York] Knicks, blame our dysfunctional lawmakers in Albany, who have saddled top-earning New Yorkers with the highest state and city income taxes in the nation, soon to be 12.85 percent on top of the IRS bite.”

On a five-year contract worth $96 million, LeBron would pay

• $12.34 million in New York taxes.
• $10.32 million in NJ state taxes
• $5.69 million in Ohio state taxes
• No state income taxes in Florida 

Note: Professional athletes do have to pay other state taxes for the dates they play in visiting team arenas, but most of Mr. James’s considerable endorsement income would be taxed at Florida rates.

Business & Media Institute,  LeBronomics: Could High Taxes Influence James’ Team Decision?, 7/8/2010 http://www.businessandmedia.org/articles/2010/20100708120415.aspx

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From the WSJ:

We feel for Cleveland fans, but maybe they should allocate some of their wrath to the state politicians who keep driving high-income individuals and their businesses to financially sunnier climes.  

While LeBron’s departure got extraordinary media attention, it is hardly unique.

• In the early 1990s, Ohio was the home of 43 Fortune 500 companies. Twenty years later the number is 24.
• Census Bureau data show that from 2004-2008 Ohio saw a net outmigration of $6 billion of income and some 97,000 taxpayers.
• Even Ohio’s famously liberal Senator, the late Howard Metzenbaum, moved to Florida late in his life to reduce his estate taxes.

WSJ: LeBron’s Tax Holiday, July 10, 2010
http://online.wsj.com/article/SB10001424052748704075604575357232023445918.html?mod=WSJ_Opinion_LEADTop

This entry was posted on July 12, 2010 at 6:29 am and is filed under Sports & Athletics, Sports - Games - Recreation, Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.