LeBronomics: Myopic Soak-the-Rich Tax Policy Likely Cost the Knicks a Superstar

What's a post about LeBron James doing on this blog? Well, I love talking sports just as much, if not more than I love talking politics. I couldn't pass up the chance to simultaneously do both! Anyway, I just thought it was interesting to see last week that, despite LeBron's well-documented love affair with the Yankees, his close friendship with rapper Jay-Z (part owner of the soon-to-be relocated New Jersey Nets to Brooklyn, NY), his desire to become the richest athlete in the world (which the NY market would best facilitate), his love for playing in NY's Madison Square Garden (often called the "Mecca" of basketball), and the predictions of many so-called experts, LeBron chose to "take his talents to South Beach," joining forces with Dwayne Wade and Chris Bosh of the Miami Heat.

Why?

Of course, according to LeBron and many talking heads on TV, playing alongside Wade and Bosh, two fellow all-stars and U.S. Olympic teammates, gives him the best shot at a championship. Although this is true, there's more to LeBron's decision than meets the eye.

Consistent with his desire to be the richest athlete on the planet, I'm sure LeBron's "crew" advised him that NYC has the highest state and city income taxes in the country at a 12.85 percent for top-earners, on top of what the feds already take for their share. Assuming a 5 year contract worth 96 million, LeBron will save 12.34 million by playing hoop in Miami vs. New York because there is no state income tax in Florida. To be sure, LeBron would still have plenty to put food on the table if he signed with the Knicks and no one, besides LeBron of course, would cry tears over the fact that he'd be out an extra 12.34 million. However, this makes for an interesting case study about the limits of a soak-the-rich tax mentality.

Is it any wonder why we're seeing a sizeable exodus from NY to places like Florida and Texas, 2 states that choose not to soak their successful citizens? Yes, top earners in New York get nailed on their state taxes if they are there, but lawmakers don't have the power to mandate that top-earners stay in NYC or even locate there to begin with. Eventually, as we've seen here, a soak-the-rich mentality can deter ambitious and successful people like LeBron James from coming and will encourage other ambitious and successful individuals to leave. I think it's safe to say that die-hard Knicks fans can at least partly blame their well-meaning, but short-sided lawmakers in Albany for LeBron choosing Miami over New York.

[P.S. - Nic, could you copythis post over to ArmchairPoliticians when you get the chance? Thanks!]