According to a recent article in Forbes by Kelly Phillips Erb, current tax law may make Tony Romo, controversial quarterback of the Dallas Cowboys, the highest paid NFL player.
Romo signed a 6-year $108 million dollar contract extension, much to the chagrin of the Twitter world. Regardless of whether or not the sports world approves, Romo is at least winning the salary game, as his contract extension makes him the highest paid NFL player after taxes.
Based purely on salary, Romo would be the fifth highest paid player in the NFL, but his location gives him an edge when taxes are involved. Texas, the state in which he resides, is “kinder” in regards to its tax rates, which leaves Romo with a higher take home salary than even Baltimore Ravens quarterback Joe Flacco. The Ravens quarterback, despite being the highest-paid player in NFL history, lives in Maryland. The state, with its “millionaire’s tax,” will potentially subject Flacco to a 5.75% tax on his earnings in the state and possibly a 2.75% local tax.
In the article, Erb asks why all athletes don’t move to states like Florida and Texas. She notes that there are a few who have adopted that strategy, Tiger Woods included. Unfortunately for NFL athletes, such flexibility is not part of their job description.
Erb notes that residency is only a portion of the whole tax picture. She goes on to explain that while individuals may have a residence in a tax free or tax light state, they still may be subject to taxes by the states in which they do business.
Taxes, as we have learned time and again, can sometimes influence the most unexpected of cultural choices.
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