Jeremy Lin took the NBA by storm in 2012, rising from undrafted Harvard grad to one of the most popular New York Knicks players in a decade. Lin led the Knicks to wins in his first six starts, and became the first player in NBA history to score 20 points and record seven assists in each of his first five starts. After a last-second game-winning three pointer against the Toronto Raptors, his rise to stardom was known ubiquitously as “Linsanity.”
After signing a three year, $25.1 million contract with the Houston Rockets, Lin moves from one of the highest taxed states in the country to one of the lowest. As a Knick, Lin paid a top state income tax rate of 8.82 percent, with New York City piling on at 3.876 percent. As a Houston Rocket, however, he will have no state or local tax burden.
At an average salary of $8,366,667, Lin will save over $1 million annually in state and local income taxes.
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NEW YORK INCOME STATE TAX BURDEN |
$717,382.03 PER YEAR |
|
NEW YORK INCOME CITY TAX BURDEN |
$323,034.01 PER YEAR |
|
TEXAS STATE INCOME TAX BURDEN |
$0 PER YEAR |
|
HOUSTON INCOME CITY TAX BURDEN |
$0 PER YEAR |
|
TOTAL INCOME TAX SAVINGS |
$1,040,416.04 PER YEAR |
In total, Jeremy Lin will save over $3.12 million in income taxes over the life of his contract with the Rockets. Factoring in his endorsement earnings, the number climbs even higher.
Just as the Rockets will compete against the Knicks on the basketball court, Texas and New York are competitors in the economic sphere. New York’s crushing tax burden is a compelling factor in chasing elite athletic talent to states like Texas, just as it has steadily pushed job creators and families out of the state.
This should not be a surprise, as the nine no-income tax states have consistently outperformed the high-tax states, like New York, over the past decade. According to the 2012 American Legislative Exchange Council’s Rich States, Poor States report:
- In terms of gross state product growth, the nine states without a personal income tax outperformed the nine states with the highest personal income tax by 39 percent over the past decade.
- The nine states without a personal income tax have outperformed the U.S. average by over 25 percent over the past decade
- Average population growth among the nine no-tax states was 148 percent higher than in the nine high tax states over the past decade.