In the wake of a disappointing NBA Finals for LeBron James and the Miami Heat, the conversation in the professional basketball universe has shifted to who’s going where. Many big names are opting for free agency, sparking speculation about trade deals and new regimes.
Carmelo Anthony is one of those names – and the Chicago Bulls are on the list of rumored destinations for the seven-time NBA All-Star.
Amazingly, Illinois has a competitive financial advantage over another state in this bidding war – its flat tax.
Carmelo, who has played for the New York Knicks since 2011, has paid more than $7 million in state income taxes, assuming he has filed as an individual and taken no deductions.
On top of that, he has paid $2.8 million in New York City individual income taxes.
If Carmelo had played for the Bulls for those four years, his state income taxes would have totaled $3.8 million (the city of Chicago has no additional individual income tax).
A key driver behind that nearly $6 million difference is New York’s multilayered approach to income taxation.
New York taxes personal income at eight ever-higher rates, topping off at 8.82 percent. That’s the eighth highest in the U.S., according to the nonpartisan Tax Foundation, which also reported that New York's state and local income tax burden is the highest in the nation.
On top of that, New York City is one of only three cities in the U.S. to tack on an additional city income tax. It, too, is progressive, meaning the more you earn the more you pay in taxes. New Yorkers making $500,000 or more pay a 3.876 percent income tax to the city. That includes Carmelo Anthony.
As these athletes consider their next move, they’ll inevitably have a laundry list of variables to consider, including team chemistry, championship potential, media markets, family and geography.
But they’ll also consider how much of their own money they get to keep.