Seven-time NBA all star Dwight Howard yesterday 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 (4.5% annual increases over his existing contract). He spurned a much higher offer from the L.A. Lakers -- $118.0 million over five years (7.5% annual increases). Several tax folks have run the numbers and concluded that Howard will receive more after-tax income by signing with the Rockets rather than the Lakers, based on California's 13.3% top marginal income tax rate and the absence of a state income tax in Texas, after taking into account the application of various state and local "jock taxes." - Accounting Web: Will Taxes Affect Dwight Howard's 'Decision?'
- Dream Shake: Will State Income Tax Bring Dwight Howard to Houston?
- Forbes: Could State Taxes Cause Dwight Howard to Flee L.A. for Houston?
- Joy of Tax Law: The Taxing Lives of Dwight Howard and Professional Athletes
- Wall Street Journal: Dwight Howard and the Tax Man
- Wall Street Journal: Tax Break Could Give Texas Teams an Edge
- The Week: Could Low Taxes Help Texas Teams Lure Dwight Howard?
(Hat Tip: Tony Nitti.)
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