- - Wednesday, September 4, 2013


Vegas odds-makers are already taking bets on which teams will be the final contenders for championship rings as football season officially kicks off Thursday night. The best advice on where to place those bets might come from an accountant.

Arian Foster, the star running back for the Houston Texans, hinted at this last week when he explained what he liked best about living in the Lone Star State. “There’s no state income tax,” he explained. Each player receives only 17 paychecks a year, nine of which are subject to state income taxes in the town where their home games are played, and the remaining eight are taxed according to the location of away games.

Since salary caps limit how much NFL teams can pay players, the biggest difference in what players can earn from one team to the next often comes down to home-state income taxes. This can range from zero in Florida, Tennessee, Texas and Washington state to 8.82 percent in New York, 8.97 percent in New Jersey and 13.3 percent in California.

Last year, when Mr. Foster earned $18 million, he didn’t have to pay state or local income taxes on any of the money he earned in Texas. If, however, he played for the San Francisco 49ers or the San Diego Chargers, Mr. Foster would have shelled out more than $1.2 million to California bureaucrats.

Life at the top is generally brief, with an average NFL career spanning less than four seasons. So low- and no-income tax states would have a considerable advantage in luring the best players seeking to maximize their take-home pay while they’re at the peak of their career. That scenario is already a fact of life in professional basketball.

The NBA, which has even stricter salary limits than the NFL, saw its best athletes consider tax burdens in their decisions about where to play years ago. For example, state income-tax rates famously came into play when NBA superstar LeBron James left the Cleveland Cavaliers for the Miami Heat when he became a free agent. Had he stayed in Ohio, he would have paid $12,500 in state taxes for every single home game under the contract he was offered.

Tax rates have been a reliable predictor of success on the court. Over the past nine years, teams located in the 10 lowest-taxed cities in the NBA reached the NBA Finals 10 times, winning six championships. During that same span, only three times did a team playing in an NBA market with one of the 10 highest income-tax burdens appear in the Finals.

With an elite NFL player like Arian Foster taking a page out of NBA stars’ playbooks and allowing tax burdens to help determine where he plays, it’s only a matter of time until NFL teams in low-tax states begin snagging all of the best free agents to end up with dominant teams.

That means the NFL landscape could soon favor teams in low- and no-income-tax states such as the Dallas Cowboys, Seattle Seahawks, Miami Dolphins, Indianapolis Colts, Denver Broncos and Tennessee Titans, and leave organizations in high-tax states such as the Cleveland Browns, Oakland Raiders, Minnesota Vikings, Buffalo Bills and New York Giants in the dust.

Taxes matter. They impact where families live, they determine where and when people work, and soon, they could dictate gridiron success.

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