We come not to praise or bury LeBron James, but only to note that by moving to Miami he’s going to save a bundle on taxes. We’ll take the King of ESPN’s word that he’s jumping to the Miami Heat from the Cleveland Cavaliers mainly for basketball reasons, but it is also true that Florida has no income tax. The rate in Akron, Ohio is a little over 7%
Mr. James figures to earn close to $100 million in salary over five seasons in Miami. According to an analysis by Richard Vedder, an economist at Ohio University, Mr. James’s net present value tax savings on his salary are between $6 million and $8 million by living in Miami versus his home town of Akron. 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.
The tax comparisons looked even worse for two other teams in the LeBron bidding, the New York Knicks and New Jersey Nets. The New York Post estimated that New York City and state taxes of 12.85% on high income earners would have taken more than $12 million from Mr. James. New Jersey’s rate is nearly 9%. Both of those teams are lousy, but it can’t help their free-agent sales pitch to start out $9 billion to $12 billion in the after-tax hole.