Would you like a break from coronavirus news?
In a normal springtime without a pandemic, some of us would be talking with friends and co-workers about March Madness, the opening day of Major League Baseball, or the Iowa Hawkeyes winning a national championship in wrestling (they were the favorites to win it all this year, anyway).
Now though, perhaps the most prominent sports story is NFL quarterback Tom Brady signing with a new team. Brady left his long-time home as a New England Patriot and signed with the Tampa Bay Buccaneers.
It has been reported that the Buccaneers and Los Angeles Chargers both presented identical $60 million offers to the quarterback.
Whatever reasons Brady had for leaving the Patriots organization, taxes might have impacted his decision to sign with Tampa Bay. Massachusetts has a flat income tax of 5.05%, California has a top rate of 13.3%, while the state of Florida does not impose any income tax.
Signing with a team in Florida instead of California may save Brady an estimated $8 million over the life of his contract. He will of course still owe about $19.5 million in federal income taxes and he will have to pay the so-called “jock tax” for games played in states that do have an income tax.
It’s not just franchise quarterbacks and professional athletes who are making these types of decisions, though a few weeks ago we shared a story of a baseball player moving to avoid state income taxes. Taxes are a factor that impact where people of all income levels choose to live. Iowa has the 42nd worst tax climate in the country. Our state’s high tax rates make it harder to compete with neighboring states for businesses, jobs, and people.
