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Another Athlete Speaks Out On The Impact Of High State Tax Rates

Forbes Business Policy Another Athlete Speaks Out On The Impact Of High State Tax Rates Patrick Gleason Contributor Opinions expressed by Forbes Contributors are their own. I cover the intersection of state & federal policy and politics. Following Feb 28, 2023, 11:59pm EST | Press play to listen to this article! Got it! Share to Facebook Share to Twitter Share to Linkedin ORCHARD PARK, NEW YORK – OCTOBER 31: Jordan Poyer #21 of the Buffalo Bills celebrates after making .

. . [+] an interception in the fourth quarter against the Miami Dolphins at Highmark Stadium on October 31, 2021 in Orchard Park, New York.

(Photo by Timothy T Ludwig/Getty Images) Getty Images It’s no secret that Florida is home to many former New Yorkers, even more so now than was the case only two years ago. 61,728 former New York residents exchanged their Empire State drivers license for a Florida license in 2021, but in 2022 that number rose to 64,577, more than in any previous year according to data from the Florida Department of Highway Safety and Motor Vehicles. Crime, high housing costs, relatively hefty state and local tax burdens that are now of limited federal deductibility, and the increased ability to work remotely are all major factors fueling the migration of people from blue states like New York, California, and Illinois to red states like Florida, Texas, and Tennessee.

While taxes aren’t the only reason people move from high-tax states like New York and New Jersey to low-tax locales like Florida and Texas, former New York Jet and current Miami Dolphin Tyreek Hill, who was among the tens of thousands of new Sunshine State transplants last year, highlights how marginal tax rates are a major factor, particularly for high-earners. Hill said signing a new contract with the Jets last year “was very close to happening. ” What prevented that, said Hill, were “those state taxes .

” “I had to make a grown-up decision,” Hill said. Hill’s decision is backed by basic arithmetic. “Playing for Miami will save him an estimated $2.

7 million in state and local taxes this season alone,” writes Jared Walczak, vice president of state projects at the Tax Foundation. “Had he played for the Jets this year, he would have owed an estimated $3,191,968, of which $2,984,409 would go to New Jersey and $207,559 would go to other states. Playing for the Dolphins, he will not owe any income taxes to Florida (which doesn’t have an income tax), but his away games will yield an estimated $474,519 in liability elsewhere on the $30 million he’ll make this year.

” Tyreek Hill’s sentiments were echoed more recently by the Buffalo Bills’ Jordan Poyer. Poyer, a Pro-Bowl safety who has spent six years with the Bills and is set to become a free agent, says state income tax rates are factoring into his thinking when it comes to his next move. MORE FOR YOU Why The Rock’s Social Media Muscle Made Him Hollywood’s Highest-Paid Actor Savannah Guthrie Leaves TODAY Show Broadcast After Positive Covid-19 Test Richard Tuttle At David Kordansky LA; Calder Installed By Tuttle At PACE LA “A lot of people ask me, ‘if it wasn’t Buffalo, then where would you go?” Poyer said on the latest edition of his podcast.

“I kind of ponder the question every once in a while,” Poyer went on to say, adding that he “would love to go to a state that doesn’t take half my money. ” The median top marginal state income tax rate among all 50 states is 5. 0%.

While income tax rates have come down in many states over the past decade, they’ve risen in New York. New York state now assesses a top income tax rate of 10. 9%, the second highest top marginal income tax rate in the nation.

The overall average state and local tax burden in New York is 15. 9%, the highest in the nation. “It’s crazy to me how taxes work,” Poyer said, adding that “taxes play a big part in all of our lives.

Poyer went on to note how some states “take half of your check away,” which leaves him and others wondering “what are they doing with that money?” Some states provide public services at far less cost than others. Florida and New York, for example, have similar population sizes. Florida now has a population of more than 22 million and New York is home to more than 19 million people.

Yet state government spending in New York is nearly twice that of Florida. “As recently 2013 the two states had similarly populations, but so many people have moved to the Sunshine State that it’s now roughly 2. 6 million people larger,” explained a February 9 Wall Street Journal editorial.

“Yet, believe it or not, Florida’s state budget as measured in the latest proposals from the two governors, is only half the size of New York’s. ” It’s not just NFL players who want to avoid a state where they’ll face a combined top marginal income tax rate exceeding 50%. Executives for California-based Major League Baseball clubs have expressed discouragement that many top prospects have been uninterested in signing with a California team.

Matt Borelli wrote for DodgerBlue. com in January that “it can be presumed that California isn’t an appealing destination for free agents because of the state’s income tax rate of 13. 3%.

” “California wasn’t viewed as a destination by many players,” the New York Post’s Jon Heyman wrote in December. “One frustrated exec said, ‘I’m running into that a lot. ’” Research has been conducted looking into the advantage that professional sports teams in low-tax states have over opposing teams based in high-tax states.

‘State Income Taxes and Team Performance: Do Teams Bear the Burden?,’ a 2018 study by Erik Hembre, an economist at the University of Illinois-Chicago, looked into “the effect of income tax rates on professional team performance using data from professional baseball, basketball, football, and hockey leagues. ” “Regressing income tax rates on winning percentage between 1995 and 2017,” Hembre found “robust evidence of a negative income tax effect on team performance. ” In another 2018 paper , ‘Touchdowns, Sacks and Income Tax – How the Taxman decides who wins the Super Bowl,” economist Matthias Petutschnig analyzed data from 1994 to 2016, finding “a significant negative relation between the amount of the net (after-tax) salary cap represented by the personal income tax rate of the teams’ home states and the success of the teams.

” To offer the same net pay as a team from a low-tax state, a team from a high-tax state must offer greater gross pay, thereby diminishing the money left to entice other players. This, Petutschnig found, “reduces the average talent level of the whole roster of a team in a high tax state and diminishes its chances of winning. ” Another paper published by Hembre in 2021 examined “the effect of state income taxes on professional sports team performance,” finding “that for each percentage point increase in state income tax rates, team winning declines by 0.

70 percentage points. ” While state taxes have high dollar ramifications for professional athletes, state lawmakers need to keep in mind that they’re also an important factor for regular, non-celebrity workers. As the Tax Foundation’s Walczak explains, that’s especially the case “in this era of increased workplace flexibility , where many employees can live and work from just about anywhere, it factors into the decision-making of plenty of people who aren’t NFL superstars too.

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From: forbes
URL: https://www.forbes.com/sites/patrickgleason/2023/02/28/another-athlete-speaks-out-on-the-impact-of-high-state-tax-rates/

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