CNBC’s Darren Rovell analyses the fact that because of the differences in tax rates between New York and Texas, the Rangers could make a significantly smaller free agent offer to Cliff Lee on paper and still pay him more than he would receive from the Yankees.
That’s because Texas has no state income taxes.
In one example, the combined state and city taxes of New York City could reduce Lee’s take home pay by more than $13 million over the life of the contact.
That wouldn’t even count his endorsements and other investment income.
The Miami Heat had the same advantage with signing LeBron James and Chris Bosh as there’s no income tax in Florida either.
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