Monday, June 29, 2009
State taxes and professional athletes
I woke this morning to Colin Cowherd on ESPN radio. In the middle of his rant on valuing Billy Mays' death over Michael Jackson's... he suddenly segues for a brief moment (before cutting to commercial and resuming his Mays/Jackson afterward) into the topic of Oregon raising their state tax from 9% to 11% for its top tax bracket.
Cowherd argues that a pro athlete considering signing with the NBA's Portland Trailblazers has to consider that they'll lose that 11% of their income signing there, and how states like Florida and Texas have an advantage when signing top talent because of their lack of a state tax.
Granted, it's a key issue to consider. However, Washington's lack of a state tax hasn't offered the Seattle Mariners, Seahawks and (until they were taken away) Supersonics much of an advantage in luring top talent away. In fact, it's geographic distance from the rest of the US has rendered those teams just as much of a disadvantage. The Tennessee Titans, Nashville Predators and Memphis Grizzles don't see significant advantages in signing talent in their respective leagues just because Tennessee doesn't have an income tax.
Conversely, major markets like New York City, Chicago and Los Angeles have state taxes and even very high costs of living, yet it hasn't deterred top athletes from signing with the Yankees, Knicks, Rangers, Jets and Giants (yes, both NFL teams technically play in New Jersey... which also has a state tax)... or the Lakers, Dodgers, Kings and Angels... or the Bulls, Bears, Cubs, Blackhawks and White Sox.
In noting Texas and Florida, Cowherd neglects to mention that both states are still considered by much of the population as great places to live. Florida, obviously, is a tropical paradise: It's little wonder much of the nation elects to retire there. And Texas is considered the heart of the South, the perfect blend of urban sophistication and rural country life, with a good dose of emigrated Latino culture and a ton of wide open space at an affordable price. And as crazy as summer and autumn storms may get, the winters are fairly mild compared to the rest of the country.
And when it comes to the major markets, the best teams with the most money to spend on top talent often roost there, and great players are going to flock to great teams that offer them significant loads of money regardless of the tax situation. Once you're making millions of dollars, most can't tell the difference between a state tax and no state tax anyway. Most of it's going in the bank either way. Guys sign with the Yankees to win a World Series... not because of a favorable tax situation.
While state taxes are certainly a factor, they are rarely a major factor compared to other factors such as the quality of the team and the quality of the locale. Most of these guys are getting millions of dollars hand over fist and couldn't care less about the tax situation.