Despite the fact that I genuinely was disgusted and told myself that I couldn’t have been more disinterested in the LeBron James circus of the last couple of weeks, I still took time out of my schedule to watch some of the narcissism on Thursday night.
Evidently, I wasn’t alone. The visitors on our message forums didn’t care to engage in very much ‘LeBron talk’ before his announcement…but, reaction to the process yielded an interesting conversation that can be seen by clicking here.
The Saturday edition of the Wall Street Journal. finally gave us the kind of intellectual insight on this topic that we felt was worthy to launch a topic on the main blog. The following are two fantastic perspectives of the LeBron situation that we thought you would enjoy:
We come not to praise or bury LeBron James, but only to note that by moving to Miami he’s going to save a bundle on taxes. We’ll take the King of ESPN’s word that he’s jumping to the Miami Heat from the Cleveland Cavaliers mainly for basketball reasons, but it is also true that Florida has no income tax. The rate in Akron, Ohio is a little over 7%.
Mr. James figures to earn close to $100 million in salary over five seasons in Miami. According to an analysis by Richard Vedder, an economist at Ohio University, Mr. James’s net present value tax savings on his salary are between $6 million and $8 million by living in Miami versus his home town of Akron. Professional athletes do have to pay other state taxes for the dates they play in visiting team arenas, but most of Mr. James’s considerable endorsement income would be taxed at Florida rates.
The tax comparisons looked even worse for two other teams in the LeBron bidding, the New York Knicks and New Jersey Nets. The New York Post estimated that New York City and state taxes of 12.85% on high income earners would have taken more than $12 million from Mr. James. New Jersey’s rate is nearly 9%. Both of those teams are lousy, but it can’t help their free-agent sales pitch to start out $9 billion to $12 billion in the after-tax hole.
While LeBron’s departure got extraordinary media attention, it is hardly unique. In the early 1990s, Ohio was the home of 43 Fortune 500 companies. Twenty years later the number is 24. Census Bureau data show that from 2004-2008 Ohio saw a net outmigration of $6 billion of income and some 97,000 taxpayers. Even Ohio’s famously liberal Senator, the late Howard Metzenbaum, moved to Florida late in his life to reduce his estate taxes.
We feel for Cleveland fans, but maybe they should allocate some of their wrath to the state politicians who keep driving high-income individuals and their businesses to financially sunnier climes.
(2) In “Notable & Quotable” the WSJ also gave us the following from “Reason magazine’s Nick Gillespie writing yesterday at Reason.com on LeBron James leaving Cleveland for Miami:”
James’ ESPN appearance last night may have been an awful exercise in press relations, but he’s being attacked for doing exactly what more than half the population of Cleveland has done in the last 60 years: getting the hell out of the place. On top of that, his motivation seems genuine: As he told Larry King earlier this year, his b-ball legacy depends on earning championship rings, not putting up MVP numbers. He wants to be Michael Jordan 2.0, not Charles Barkley 2.0 . . . While there’s no certainty that teaming up with the Heat will lead James to the winner’s circle, it’s definitely the case that he doesn’t deserve abuse for taking full advantage of the free agent opportunities available to him. As labor in a stridently enforced cartel, he puts the asses in the seats and he should extract whatever he can during a career that can end at any minute. More important, Cleveland’s destiny as a dying industrial city is in no way linked to James’ staying or going. As economist Dennis Coates has pointed out, having a major professional franchise in an area actually reduces per capita income by about $40.
Cities don’t rise and fall on the backs of their sports teams and sports figures (trust me, I lived in Buffalo three of its four Super Bowl years and nothing would have changed had Scud Norwood split the uprights against the Giants). If Cleveland and its rooters in the press (who never seem to actually go there) want to take some lessons from James’ departure, they should think about what they can do for the 99.9 percent of its residents who don’t play in the NBA or own professional sports teams.