How Big of an Advantage is "No State Income Tax" for the Rockets?

Be aware, that state income tax is very important. Something that you don't know is that teams that comes into texas for the game, those player for that game does not pay state income tax. ie; When the rockets play in NY - the rockets players pay state income taxes because their wages were earned in NY. Same goes when the Rockets go to Toronto, they pay the Foreign state income tax.

Signing with a team in a state that does not have income taxes is only beneficial for the 44 games or so they play at home.

 

- Your math is shaky and your conclusion is unsupported. Millions of dollars in tax exempt income over the life of a contract is somehow pocket change to a professional athlete with a narrow window in his life to maximize his earning potential? Really??

- You also seem to have neglected to account for the fact that a team that plays in the Southwest division plays more games on their schedule against division rivals like San Antonio and Dallas, i.e. other Texas teams, than a team based in another division. So a Rockets player actually experiences savings on greater than 50% of their yearly salary.

- But even more egregiously, it's unclear why you used the "37%" figure when figuring state income tax savings, if you were trying to make some sort of comparison between a player playing for a team based in a state with no income tax (i.e. Texas) versus one that has one. And that's exactly what you did, since you cited the Clippers in your first paragraph and then compared them to the Rockets.

You are not properly representing the additional portion of a player's salary that would be subject to state income tax withholding if the player played for a team in any state but Texas (or Florida).

41 home games and (if I'm not mistaken) 4 more road games against division rivals in Texas means roughly 56 percent of all regular season games a Rockets player plays are exempt from income tax. Note that it's actually even slightly more than this as Florida has no state income tax either, and so road games against the Heat and Magic are not taxable. But you didn't figure this in, so I won't either, to keep the math simpler.

Here is what the math SHOULD have looked like based off your own salary figures:

First Year - 56% of $19,112,917 = $10,703,233.52, taxable at CA's highest earner bracket of 10.3% = $1,102,433 saved in state income taxes by playing for the Rockets and not the Clippers in just the first year.

Second Year - 56% of $20,446,376 = 11,449,970.56 taxable at the CA rate of 10.3% = 1,179,346.97 saved in state income taxes for the second year

Third Year - 56% of $21,779,835 = $12,196,707.60 in salary, taxable at the 10.3% rate = $1,256,260.88 saved in the third year

Fourth Year - 56% of $23,113,294 = $12,943,444.64 salary taxable at the 10.3% rate = $1,333,174.79 in tax savings for the fourth year

Fifth Year - 56% of $24,446,753 = $13,690,181.68 salary taxable at 10.3 percent would be $1,410,088.71 in tax savings for the fifth year.

Total saved in state income tax over the life of the contract: $6,281,304.35

And you claimed it was "a few hundred thousand dollars" in savings? If somebody tried to pay their taxes the way you are figuring the rates, I don't see how they don't lose their house and go to prison.

To put it another way, this is over 6.2 million extra dollars a Rockets player would never get if Texas had a state income tax rate of 10.3% instead of 0%.

And what was your conclusion aside from getting the math wrong? That that's not a lot of money? Yeah....it is.

Terrible math, wrong conclusion altogether, but I like the effort.

 

also, I don't know about other states, but Colorado has much lower property tax than Texas. So it balances out.

Colorado -- State Income Tax, Low property tax
Texas -- No Income Tax, Higher property tax

If a Nuggets player purchases a huge house in Denver, I could argue that his overall taxes (state plus property) are lower than Dallas or Houston.

 

But how does no state taxes stack up against the endorsement income from living in high tax metro areas in NY MA and CA?

 

Wow, you didn't read his post at all. He was comparing the difference between what he would make after takes if he re-signed with the Clippers, which allows for higher raises each year then if he signed with the Rockets. That is why the difference was so small.

 

Do you people not read? The away games played in taxable states is the so called jock tax. He accounted for it.

 

With Harden, players could be drooling to get here. Add our young and talented roster with the state income tax thing and it looks real nice

 

The benefit of not having to pay a 10.3% "jock tax" on 56% of games played in the player's home state of Texas was not represented properly at all. In fact it was (one would hope accidentally and not deliberately) understated and written off altogether.

 

The issue is more all the home games in California that are taxed at 10.3% each vs. all the home games that would be played in Texas that are taxed at 0% each. There is a huge difference between the two.

 

Lol this is what I'm talking about. Why the hell are you deliberately not accounting for over half the player's income, that he earns at HOME playing in Texas, in a non income tax state? That's how you figure SAVINGS, my friend. You say "Okay, what will this player have to pay on this giant chunk of games that are played in his home state, taxed at a 10.3% rate each?" "Oh, 6 million dollars." Now what if the rate in his home state, for that same chunk of games, was zero instead? And he were to save that money--you know, because those same home games are all played in a state with no income tax instead?

lol your understanding of this issue is weird and wrong on a very fundamental level

I made this very clear that you didn't understand the benefit of playing over half the games in Texas, only to see you talk about road games again. My god.

 

Home games played in California mean the player is taxed over $6.2 million on that income, since that GIANT CHUNK of their salary is now taxable.

If those same home games are played in Texas, the player pockets the money. Since that same GIANT CHUNK of their salary is not subject to state income tax. They're ahead $6.2 million over the life of their contract.

This is pretty simple to get, no matter how much you try to obfuscate this and (I guess deliberately, then) try to talk about something like "Toronto road games," like that even has anything to do with it.

Home games son. This is about home games.

 

"Jock tax" is the slang used to describe the way in which road games are taxed.

I'm talking about the massive chunk of home games you've deliberately ignored, since that is 100% what people usually ARE talking about when they discuss the difference between playing for a team based in a state with no income tax vs. one that does.

You're not framing the issue honestly at all.

 

There is such a thing as STATE INCOME TAX BEING ASSESSED IN CALIFORNIA ON HOME GAMES. Sheesh.

And it is a giant wad of cash ($6.2 million) that more or less completely invalidates all of your conclusions.

 

Nice read...interesting perspective...since it is a very flaunted thing by both the Rockets and the Mavericks...interesting thoughts....

 

and the spurs...lol

 

BeeBeard might be the most ignorant poster in the history of Clutchfans.

Or he is just trolling. Not sure.