The lack of state tax also played a role in the heat signing 3 max FA this summer.

Now you can argue over whether this really plays a roll, and that the NY market is much larger so there are more endorsement opportunities. But I am curious if the lack of state tax is really helping these other teams then wouldn't that make the salary cap a little out dated because it puts all other teams at a huge disadvantage? (I think it is regardless and so are guaranteed contracts)

http://www.ultimateknicks.com/forum/topic.asp?t=36318&page=3#773840

knickstorrents wrote:From the larry coon FAQ:

61. Are teams really competing on a level playing field? Since the tax rate is different in the different states and Canada, don't the teams in a more "tax friendly" state have an advantage over the other teams?

Yes they do. For example, when Shaquille O'Neal became a free agent in 1996, the Magic and Lakers competed for his services. Since Florida has no state income tax, Orlando's offer, which was lower, was actually higher in terms of net income. LA overcame this disadvantage by offering an accelerated payment schedule for the salary in the first three seasons of his contract (lump sum in seasons one & three, 50/50 in season two).

The new CBA closed the loophole that LA used to sign Shaq. Now, at least 30% of a player's salary must be paid bi-weekly throughout the season. They also added an extra regulation to help neutralize the tax disadvantage of Canadian teams. All teams are permitted to offer a bonus of up to 25% (see the previous question). The key point is that for U.S. residents in Canada, this bonus is taxed at just 15%. Using this bonus, Canadian teams can nearly achieve tax neutrality.

So the benefit for state taxes was a loophole that was closed... the remaining bonus is meant for canadian teams.... so yes there is still a big difference in what a player gets for salary depending on state taxes.

has anyone heard of a player signing on one team over another because of taxes, especially when talking about more than the average type players?

I would say no.

JohnWallace44 wrote:Grant Hill and TMac

Those are the only two, but its all nonsense anyway. This is going to be another full year of rampant speculation on every direction possible for 'Melo if we continue to slurp it up. It makes total sense for 'Melo and his wife to come to Manhattan or Brooklyn. It makes no sense for them to go to Houston and a little sense for them to go to the Clippers.

That's it. All of the conjecture is just static noise.

they went to Orlando cause of state taxes?

I don't think the taxes play a big role but it is being talked about so they should be considered. I just don't know how you make it fair because the larger market teams can offer greater exposure to endorsement deals so wouldn't that counteract the tax issue?

I always here the endorsement argument thrown out there when people talk about playing in NY yet many players don't bite - so why would a player take a contract in a state that has no income tax when the benefit isn't that significant. Are they really that frugal?

martin wrote:

OasisBU wrote:My feeling is, if there is any truth to the state taxes playing a role then the owners should be pushing for some type of new agreement that levels the playing field.

I don't think the taxes play a big role but it is being talked about so they should be considered. I just don't know how you make it fair because the larger market teams can offer greater exposure to endorsement deals so wouldn't that counteract the tax issue?

I always here the endorsement argument thrown out there when people talk about playing in NY yet many players don't bite - so why would a player take a contract in a state that has no income tax when the benefit isn't that significant. Are they really that frugal?

on a 6 year $100M contract, having no state income taxes would save you about $4M over the life of the contract.

in the big picture, not significant.

Where did you get this number? In New York, for example, it's 6.85%, or close to $7 million out of $100 million. Then, take into account that this is $7 million after tax, not pre-tax, so that's something like $11 million pre-tax. It's more like getting a $100 million contract in a tax free state is like a $111 million contract here in NY. This is not including sales tax, that they will inevitably wind up paying living in a higher taxed area. If you want to get really depressed, do a cost of living comparison: http://www.bestplaces.net/col/?salary=100000000&city1=51245000&city2=53651000.

I do think it has played a factor for some of the more money-motivated players. If you think about it, the higher your state tax rate is, the more of a disadvantage you have in the NBA; it's a rather ridiculous phenomenon, thanks to the stupid CBA. I think the CBA should allow a state income tax adjustment to make the playing field a bit more level.

In Carmelo's case, I don't think it will be a big factor.

Solace wrote:

martin wrote:

OasisBU wrote:My feeling is, if there is any truth to the state taxes playing a role then the owners should be pushing for some type of new agreement that levels the playing field.

I don't think the taxes play a big role but it is being talked about so they should be considered. I just don't know how you make it fair because the larger market teams can offer greater exposure to endorsement deals so wouldn't that counteract the tax issue?

I always here the endorsement argument thrown out there when people talk about playing in NY yet many players don't bite - so why would a player take a contract in a state that has no income tax when the benefit isn't that significant. Are they really that frugal?

on a 6 year $100M contract, having no state income taxes would save you about $4M over the life of the contract.

in the big picture, not significant.

Where did you get this number? In New York, for example, it's 6.85%, or close to $7 million out of $100 million. Then, take into account that this is $7 million after tax, not pre-tax, so that's something like $11 million pre-tax. It's more like getting a $100 million contract in a tax free state is like a $111 million contract here in NY. This is not including sales tax, that they will inevitably wind up paying living in a higher taxed area. If you want to get really depressed, do a cost of living comparison: http://www.bestplaces.net/col/?salary=100000000&city1=51245000&city2=53651000.

I do think it has played a factor for some of the more money-motivated players. If you think about it, the higher your state tax rate is, the more of a disadvantage you have in the NBA; it's a rather ridiculous phenomenon, thanks to the stupid CBA. I think the CBA should allow a state income tax adjustment to make the playing field a bit more level.

In Carmelo's case, I don't think it will be a big factor.

so THAT'S why eddy's in financial trouble!

martin wrote:

Solace wrote:

martin wrote:

OasisBU wrote:My feeling is, if there is any truth to the state taxes playing a role then the owners should be pushing for some type of new agreement that levels the playing field.

I don't think the taxes play a big role but it is being talked about so they should be considered. I just don't know how you make it fair because the larger market teams can offer greater exposure to endorsement deals so wouldn't that counteract the tax issue?

I always here the endorsement argument thrown out there when people talk about playing in NY yet many players don't bite - so why would a player take a contract in a state that has no income tax when the benefit isn't that significant. Are they really that frugal?

on a 6 year $100M contract, having no state income taxes would save you about $4M over the life of the contract.

in the big picture, not significant.

Where did you get this number? In New York, for example, it's 6.85%, or close to $7 million out of $100 million. Then, take into account that this is $7 million after tax, not pre-tax, so that's something like $11 million pre-tax. It's more like getting a $100 million contract in a tax free state is like a $111 million contract here in NY. This is not including sales tax, that they will inevitably wind up paying living in a higher taxed area. If you want to get really depressed, do a cost of living comparison: http://www.bestplaces.net/col/?salary=100000000&city1=51245000&city2=53651000.

I do think it has played a factor for some of the more money-motivated players. If you think about it, the higher your state tax rate is, the more of a disadvantage you have in the NBA; it's a rather ridiculous phenomenon, thanks to the stupid CBA. I think the CBA should allow a state income tax adjustment to make the playing field a bit more level.

In Carmelo's case, I don't think it will be a big factor.

i'll say it again: taxes are paid for the state that you actually play games in. Physically play games in. Orlando plays in NY for a game, those guys pay state tax on 1/82th of their salary.

Ok, do you have a source for that? That's generally not true in any other businesses. For example, if I take a business trip to Florida, I still am 100% taxed on the location of the company where I work the majority of the time. In the case of a Knicks player, this would be New York. For what you're saying to be true, they would have to file taxes in every state that there's an NBA team. Either way, even if you are accurate in how you get taxed, your $4 million estimate is still not exactly accurate.

martin wrote:

Solace wrote:

martin wrote:

Solace wrote:

martin wrote:

OasisBU wrote:My feeling is, if there is any truth to the state taxes playing a role then the owners should be pushing for some type of new agreement that levels the playing field.

I don't think the taxes play a big role but it is being talked about so they should be considered. I just don't know how you make it fair because the larger market teams can offer greater exposure to endorsement deals so wouldn't that counteract the tax issue?

I always here the endorsement argument thrown out there when people talk about playing in NY yet many players don't bite - so why would a player take a contract in a state that has no income tax when the benefit isn't that significant. Are they really that frugal?

on a 6 year $100M contract, having no state income taxes would save you about $4M over the life of the contract.

in the big picture, not significant.

Where did you get this number? In New York, for example, it's 6.85%, or close to $7 million out of $100 million. Then, take into account that this is $7 million after tax, not pre-tax, so that's something like $11 million pre-tax. It's more like getting a $100 million contract in a tax free state is like a $111 million contract here in NY. This is not including sales tax, that they will inevitably wind up paying living in a higher taxed area. If you want to get really depressed, do a cost of living comparison: http://www.bestplaces.net/col/?salary=100000000&city1=51245000&city2=53651000.

I do think it has played a factor for some of the more money-motivated players. If you think about it, the higher your state tax rate is, the more of a disadvantage you have in the NBA; it's a rather ridiculous phenomenon, thanks to the stupid CBA. I think the CBA should allow a state income tax adjustment to make the playing field a bit more level.

In Carmelo's case, I don't think it will be a big factor.

i'll say it again: taxes are paid for the state that you actually play games in. Physically play games in. Orlando plays in NY for a game, those guys pay state tax on 1/82th of their salary.

Ok, do you have a source for that? That's generally not true in any other businesses. For example, if I take a business trip to Florida, I still am 100% taxed on the location of the company where I work the majority of the time. In the case of a Knicks player, this would be New York. For what you're saying to be true, they would have to file taxes in every state that there's an NBA team. Either way, even if you are accurate in how you get taxed, your $4 million estimate is still not exactly accurate.

for the purposes of this discussion, $4M is about right. No direct link but i have read it a million times over.

Ok, if you or someone comes across it, let me know. Would be interesting to read how that works and why players in tax-free states would effectively be required to pay higher taxes than normal since they only play half their games in their home state. Any accountants around here?

Solace wrote:

martin wrote:

Solace wrote:

martin wrote:

Solace wrote:

martin wrote:

OasisBU wrote:My feeling is, if there is any truth to the state taxes playing a role then the owners should be pushing for some type of new agreement that levels the playing field.

I don't think the taxes play a big role but it is being talked about so they should be considered. I just don't know how you make it fair because the larger market teams can offer greater exposure to endorsement deals so wouldn't that counteract the tax issue?

I always here the endorsement argument thrown out there when people talk about playing in NY yet many players don't bite - so why would a player take a contract in a state that has no income tax when the benefit isn't that significant. Are they really that frugal?

on a 6 year $100M contract, having no state income taxes would save you about $4M over the life of the contract.

in the big picture, not significant.

Where did you get this number? In New York, for example, it's 6.85%, or close to $7 million out of $100 million. Then, take into account that this is $7 million after tax, not pre-tax, so that's something like $11 million pre-tax. It's more like getting a $100 million contract in a tax free state is like a $111 million contract here in NY. This is not including sales tax, that they will inevitably wind up paying living in a higher taxed area. If you want to get really depressed, do a cost of living comparison: http://www.bestplaces.net/col/?salary=100000000&city1=51245000&city2=53651000.

I do think it has played a factor for some of the more money-motivated players. If you think about it, the higher your state tax rate is, the more of a disadvantage you have in the NBA; it's a rather ridiculous phenomenon, thanks to the stupid CBA. I think the CBA should allow a state income tax adjustment to make the playing field a bit more level.

In Carmelo's case, I don't think it will be a big factor.

i'll say it again: taxes are paid for the state that you actually play games in. Physically play games in. Orlando plays in NY for a game, those guys pay state tax on 1/82th of their salary.

Ok, do you have a source for that? That's generally not true in any other businesses. For example, if I take a business trip to Florida, I still am 100% taxed on the location of the company where I work the majority of the time. In the case of a Knicks player, this would be New York. For what you're saying to be true, they would have to file taxes in every state that there's an NBA team. Either way, even if you are accurate in how you get taxed, your $4 million estimate is still not exactly accurate.

for the purposes of this discussion, $4M is about right. No direct link but i have read it a million times over.

Ok, if you or someone comes across it, let me know. Would be interesting to read how that works and why players in tax-free states would effectively be required to pay higher taxes than normal since they only play half their games in their home state. Any accountants around here?

I remember reading about CA doing that- don't believe every state does it. And they don't go after schmucks like me when I'm there, just big fish like an Alex Rodriguez or others.

The other thing to consider- while FL doesn't have an income tax, they do have very high property tax, so their south beach mansions probably cost more than a similar place in the metro region.

martin wrote:being talked about here as well.

http://www.ultimateknicks.com/forum/topic.asp?t=36318&page=3#773840

knickstorrents wrote:From the larry coon FAQ:

61. Are teams really competing on a level playing field? Since the tax rate is different in the different states and Canada, don't the teams in a more "tax friendly" state have an advantage over the other teams?

Yes they do. For example, when Shaquille O'Neal became a free agent in 1996, the Magic and Lakers competed for his services. Since Florida has no state income tax, Orlando's offer, which was lower, was actually higher in terms of net income. LA overcame this disadvantage by offering an accelerated payment schedule for the salary in the first three seasons of his contract (lump sum in seasons one & three, 50/50 in season two).

The new CBA closed the loophole that LA used to sign Shaq. Now, at least 30% of a player's salary must be paid bi-weekly throughout the season. They also added an extra regulation to help neutralize the tax disadvantage of Canadian teams. All teams are permitted to offer a bonus of up to 25% (see the previous question). The key point is that for U.S. residents in Canada, this bonus is taxed at just 15%. Using this bonus, Canadian teams can nearly achieve tax neutrality.

So the benefit for state taxes was a loophole that was closed... the remaining bonus is meant for canadian teams.... so yes there is still a big difference in what a player gets for salary depending on state taxes.

has anyone heard of a player signing on one team over another because of taxes, especially when talking about more than the average type players?

I would say no.

yea, that whole no state income tax thing is a bit overblown.. In states where there is no state income tax, you more than likely will have higher sales tax, property tax, license tax and fuel tax, as well as estate and inheritance taxes.. There are also other assorted taxes not mentioned that can easily exceed the state income tax.... so to say that they are saving is not necessarily true...