LeBron James Decision Influenced by Taxes?

There is a theory making the rounds that one of the factors that influenced LeBron James' decision to sign with the Miami Heat over his hometown Cleveland Cavaliers is the amount of state-level taxes he would pay on his income.

"While sports reporters have sought agents and teammates for the inside scoop on where NBA superstar free agent LeBron James will sign, there’s another person who may know The King’s next move: his accountant.

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,” the Post said.

The tax savings for James in Miami over New York City would be staggering, according to the Post’s analysis.

“On a five-year contract worth $96 million -- what he'd get from the Knicks or the Heat -- LeBron would pay $12.34 million in New York taxes.” Florida has no state income tax."

Of course, LeBron James reportedly passed up more money in salary just to join the Miami Heat (compared to what Cleveland and the New York Knicks were prepared to pay him), so his personal tax surely wasn't the entire reason or even the main reason for signing with Miami.

And while it is true that Florida imposes no state-level income tax on individuals, roughly half of his games in the upcoming NBA season will be played out of state, meaning the income he generates from playing in professional basketball games in other states that do have an income tax will be subject to state-level tax in those state. However, all in all figure roughly half his salary will be free of state income tax.

Consequently, it's very likely that the ability to save money in taxes had some bearing on LeBron's decision on which team to sign with and at least in part offset the "discount" he had to give Miami in order to be able to sign with them.

Which goes to show that, at the margin, the amount of taxes that one has to pay clearly affects the choices that individuals make in deciding when and what to buy and invest in, which is a lesson that many politicians conveniently ignore.

Can Someone Please Tax Me?!?

Someone named John Horner recently wrote an opinion article for the Colorado Springs Gazette, in which he lamented the fact that his tax bill isn't higher than it actually is.

The siren song of lower taxes can be a short-sighted and ultimately ruinous call. For example, the penny wise, but pound foolish decision by Colorado Springs voters in November to reject 2C has already cost me more than I would have paid in taxes. Really, I’d rather pay the pittance of a $1 a day more in property taxes than the losses I’ve already suffered in services — not to mention the other secondary costs. And, those costs will only increase with time.

Mr. Horner should be given credit for one thing - being willing to put his wallet where his mouth is. All too often the proponents of tax hikes are those that are unwilling to pay additional taxes themselves.

However, Mr. Horner should know that his tax liability is simply the minimum the government will accept from him. If he personally wants to pay more taxes, there is no reason he should not take out his own personal checkbook and write a check with a lot of zeros on it made out to City Hall.

For the rest of us living in the real world, we understand that governments already take a ridiculously high percentage of our income as it is, and are in no mood to increase that amount.

Any prior effort by voters to successfully reduce our own personal tax liability should be fully appreciated and be met with a vow to see to it that our elected representatives also come to know the virtue of frugality with taxpayer money.