As National Basketball Association fans already know, seven-time all-star Dwight Howard recently signed with the Houston Rockets for the maximum free agent contract permitted under the NBA’s “Larry Bird Rule” – $87.6 million over four years, or 4.5 percent annual increases over his existing contract.
In inking the deal, Howard turned down a much higher offer from the L.A. Lakers – $118 million over five years, with 7.5 percent annual increases.
It is not clear whether Howard’s decision was influenced by taxes. California’s top marginal income tax rate is 13.3 percent, while Texas has no personal income tax.
In the past, many team owners in professional sports have convinced local taxpayers that all they need to bring home a championship is a new taxpayer-financed stadium. It may only be a matter of time before some creative owner argues that all it would take to convince a couple of superstars to agree to play for the hometown team is for the local taxing authority to grant an exemption for the players’ salaries.
“Every culture has some ritual for joining two people together and making them stay that way, and ours is giving tax breaks.” Bauvard, Evergreens Are Prudish