Inquiring minds have been wondering for quite some time where LeBron James is going to decide to play next season. If you have tuned in to ESPN for even five minutes in the past few months, you’ve seen coverage on the NBA free agency circus, led by speculation of where LeBron James will end up. Even before the Celtics eliminated the Cavaliers from the playoffs, rumors were swirling about LeBron playing for either the New York Knicks or Miami Heat next season.
It has been somewhat entertaining to watch the media fiasco as they try to guess and speculate what exactly is going to happen. LeBron has not given even the slightest clue as to which city or team he may be leaning towards. Multiple opinions and predictions have been made by many in the media, and hardly two of them are even alike.
I don’t know what LeBron James’ ultimate goal is. Maybe he just wants to win championships. Maybe he wants to become the greatest player of all time. Maybe he wants to make as much money as he can and possibly become a billionaire. If the latter is the case, LeBrons decision can be quite interesting.
One of the least talked about scenarios in this whole ordeal is the tax implications that will apply, depending on which team he picks. Specifically, I am referring to state income taxes. I found a great article on this subject entitled, “For Income Tax Reasons Miami is a Slam Dunk for LeBron James.” After reading this and doing a little bit of research on income tax rates per state, I started to wonder if any of the other teams in income tax free states would make sense. Texas does not have a state income tax, and there are three very good NBA franchises there. Tennessee does not have an income tax, but they do however have a tax on dividend and interest income.
LeBron James may not even care about taxes, but if he does his choice can be easily narrowed down to just four teams. It would not make sense for him to move to Memphis where his investment income would be taxed. This leaves only the three teams in Texas which are Dallas, Houston and San Antonio, or the Miami Heat. Most speculators have LeBron either staying in Cleveland or moving to Miami. Financially, Miami would be the most beneficial for LeBron in the long run.
My favorite scenario is one that I made up and is completely hypothetical. Washington is one of the few states that does not have an income tax. Unfortunately, there is no longer an NBA team in the state of Washington. LeBron James should move to Seattle, Washington and bring back the Supersonics! He should buy a building and use his own money to build the team. He would be the owner and the star player. What better investment than to own an NBA franchise with one of the most polarizing players in the league as its star, himself. In this situation, LeBron would be completely in control. He would be earning income not only as a player, but also as the owner of the team. I doubt this scenario would even be allowed by the league, but I found it interesting enough to write and share. What do you think?
“For Income Tax Reasons……,” Joshua, Taxdocket.com, February 26, 2010
Income tax rates per state, Money-Zine.com