Sorry, Cavaliers, fans that the LeBronathon didn't turn out like y'all had hoped.
I don't follow hoops, but I am a fan of other sports so I know how awful LeBron James' decision to ditch his hometown Cleveland team for the Miami Heat feels right now.
But don't take it personally. Professional sports is a business, a big business. And sentiment, I have learned the hard way over the years, has no real place in any major league.
What does come into play, however, is the potential taxes due on all those high-dollar contracts.
That's why Kyle Gillis of the Business & Media Institute examined LeBronomics prior to the NBA free agent's announcement of which city he'd next call home and came up with a prescient tax prediction.
Miami was the obvious choice.
Remember, with the so-called jock tax collected by most states (and many cities), professional athletes (and other workers) typically must pay taxes to the taxing jurisdictions for the time they spend there playing, i.e., doing their job.
But by having a base in a state with low or no income taxes, the athletes can save substantial tax dollars, since half of a team's games are at home.
With no state income tax in Florida, that means LeBron doesn't have to worry about handing over any state taxes for those basketball games played in the Miami arena.
Or, notes Gillis in citing a New York Post analysis, "The tax savings for James in Miami over New York would be staggering."
The TaxProf Blog added its two cents to the calculations and came up with what a five-year contract worth $96 million would have cost LeBron in state taxes if he'd opted to play for one of the other bidders for his services:
- New York Knicks: $12.34 million
- New Jersey Nets: $10.32 million
- Cleveland, Ohio, Cavaliers: $5.69 million
- Chicago, Ill., Bulls: $2.85 million
So, once again Cleveland fans, I offer my sporting condolences for your loss. Just remember each April one of the key reasons why LeBron headed to the Sunshine State.
- Who Dat owe IRS? The NFL's Saints
- NFL opposes IRS' expanded salary reporting rule
- Taxes spur Steelers ownership deal
- NFL Eagles pass on ex-con tax credit
- Former Steeler owes IRS $631,000
- NBA tax subsidy: Fans vs. public policy
- Tax-exempt bonds and sports facilities
- British taxes drive off sports stars
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