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Sam Smith: Taxing dilemma for NBA’s 2010 free agents

With increasing taxes geared to the wealthy and the Bush tax cuts also coming off the books, it may be that the low tax states like Florida and Texas begin to have a big advantage over higher tax states when it comes to NBA free agents.
Sam Smith at Bulls.com

Taxing dilemma for NBA's 2010 free agents


The contents of this page have not been reviewed or endorsed by the Chicago Bulls. All opinions expressed by Sam Smith are solely his own and do not reflect the opinions of the Chicago Bulls or its Basketball Operations staff, parent company, partners, or sponsors. His sources are not known to the Bulls and he has no special access to information beyond the access and privileges that go along with being an NBA accredited member of the media.

Derrick Rose “Derrick’s a much better player now,” said Duke coach Mike Krzyzewski, who recently re-upped with USA Basketball for the 2010 and 2012 Olympics,. “Vinny (Del Negro) and his staff have done a great job with him. I don’t think the NBA gets credit with the amount of teaching they do. With Derrick you can see the maturity."
(Andrew D. Bernstein/Getty Images)

Could, in the end, the biggest barrier to the Bulls attracting a major free agent next summer like Dwyane Wade be the health care legislation now being debated in Washington?

Let’s face it. The prize next summer is Wade. LeBron James seems almost certain to remain in Cleveland given the weak state of the New York Knicks’ roster and uncertainty regarding the moving plans of the New Jersey Nets, supposedly James’ two speculated destinations. And do you really want to give a maximum contract to Chris Bosh, who doesn’t seem to impact winning very much? It seemed to me Bosh had a much better roster last season than Wade’s in Miami and the Heat was far better than the Raptors. And the reason why Wade could well move is that roster. There’s no way given how much Wade had to do last season that he could hold up carrying a team like that. It’s why you figure Miami is so desperate to make a major move now and why Wade, seemingly, has challenged them to do so.

Michael Beasley was at the USA Basketball mini-camp in Las Vegas Saturday hanging out in the media and family area after the scrimmage. He was the most obvious omission among the young players invited to try out for the Olympic team. Beasley couldn’t have been more gracious after the game staying around and signing autographs for everyone who asked. But he also was wearing his shorts so low you got way too much of a view of his underwear as he walked away. I know it was Vegas, but leave something to imagination. That streak of insouciance coupled with extreme immaturity suggests Miami has work to do with its roster to appease Wade.

And now comes the health care legislation, and you wonder what that has to do with anything?

The answer is taxes. The closest anyone seems to a plan now to pay for the changes is to tax the so-called rich. That would include just about every player in the NBA. I know we’re not supposed to feel sorry for rich people and assume they have so much that giving up more doesn’t matter. It does, just as comfortable people in the middle class with two cars and a nice health club membership don’t want to pay more taxes, either, even though they can afford to.

So I contacted a tax expert in Chicago, Noel Wilner, president of CBIZ MHM, an accounting and tax advisory company, and asked him to do some calculations. The assumption was single tax payer, the 2011 tax rates when the presumed five percent health care surtax would go into effect with the higher rates that year, salaries of $5.5 million, which is about the NBA average, and $17 million, which would be a high earner like Wade and no deductions.

Here were his computations:

The total tax for a $5,500,000 salary and an Illinois resident is $2,568,412. This is made up of $2,142,412 of federal income tax, $261,000 of health care tax and $165,000 of Illinois tax. A Florida resident will have the same federal and health care tax but no state income tax ($165,000).

The total tax for a salary of $17,000,000 will be $8,088,412. That is made up of $6,696,412 of federal income tax, $882,000 of health care tax and $510,000 of Illinois tax. A Florida resident will have all the same tax except no state tax ($510,000).

In addition, Wilner notes, there is typically an allocation to other states where the games are actually played. But there should be at least a savings of 50% of the state tax for being a Florida resident as 50% of the games are home games.

I know almost $9 million after taxes is a lot of money. But with the government adding on another half million dollars penalty to pay for health care and who knows how much more down the road as the rich seem to be set up as the villains in this health care debate, suddenly hanging onto more than $500,000 in state tax may sound appealing. So perhaps someone like Wade sees he can resign with his own team for an extra year under NBA rules and then get that much more in tax benefit, and maybe the money starts becoming too big to decide to leave? With increasing taxes geared to the wealthy and the Bush tax cuts also coming off the books, it may be that the low tax states like Florida and Texas begin to have a big advantage over higher tax states. And then seemingly making it even less appealing to go to a ridiculously high tax state like New York.

Durant as good--or better?!?!--than LeBron?

-- It’s being whispered now among NBA types because, I believe, under a secret NBA/ESPN provision you are not permitted to say aloud anything that might be interpreted to suggest LeBron James isn’t the best thing to ever happen in anyone’s life. But sitting in the stands in Las Vegas at the USA Basketball mini-camp and hearing NBA coaches and general managers, the gasps have been for Oklahoma City’s Kevin Durant. I’ve now heard more than one say Durant could be a better player than James given Durant’s combination of amazing size at about 6-10 and pure shooting stroke. And he’s still 20. The feeling is Durant is on the brink of being a 30 per game scorer. Plus, Durant is a serious worker. The Bulls' Derrick Rose has become close with Durant and the two have worked out together considerably this summer. Said Rose, who is five days younger than Durant: “KD is great. He’s real talented. I look at him as like a big brother to me even though we’re the same age. He’s been in the league longer. He’s a great talent, 6-10 guy who can dribble, shoot like a guard. He’s going to be a great talent in the league.”

Oden adjusts to a new role

-- While Durant is considered a certainty to be added to the USA Team, Greg Oden was in Las Vegas and just happy to be invited to try out. Oden said he didn’t expect an invitation, but was pleased he was not forgotten and hoped to show the staff he can be a solid defender and rebounder. It’s certainly a long way from the 2007 draft when Oden was the consensus No. 1 pick. There wasn’t a team executive I could find who now wouldn’t pick Durant first. No matter what they say, there wasn’t one two years ago who would have. Though Oden seems over most of his injuries, his movements remain somewhat mechanical and it’s difficult to project him as a high level NBA player anymore, but more a rebounding and shot blocking specialist. It was clear even USA officials were looking to see if Oden’s mental state was improved from the brooding person he’s seemed to have become. He seemed, as expected, clearly weary about discussing his frustrations and hoped to begin, finally, to look forward to some sort of productive career.

“It’s just good to be here to let guys know you are interested in playing,” said Oden. “I’m just going out there and playing and not worrying about all that (other) stuff.

“You want to start out (your career) really good, you want to play well,” said Oden. “You want to be looked at as someone who is premier player. But things happen. I never get caught up in the hype. I just try to go out and play and do what I can to help my team. Injuries set me back a lot the last couple of summers I wasn’t able to play. Last year when the season came, I was set back because I wasn’t training by the time camp started. I had injuries during the season and that set me back more and I never got where I wanted to be. It’s tough. Things happen. You have to play through it and live through it and do what you can.

“I’m still working at it,” said Oden. “I’m trying to improve each day. I’m not comparing to what I was. I’m just trying to be a better player, getting my knee and legs back.

“I thought they (USA team) were going to be like, ‘It’s a lost cause.’ They see something in me so I want to come out here and work and show them what I’ve got,” said Oden. “It’s a team with a bunch of good guys. They have a lot of scorers. I just want to do some things, defense and rebound. For me to be a guy who can rebound and block shots, that’s good.” Oden had a game high 10 rebounds in the Saturday scrimmage, but was outplayed by opposing center Brook Lopez.

The team is looking for inside size, so Oden has a chance. Though in international ball the centers generally roam outside and shoot, which is why Chris Bosh played more center than Dwight Howard on the 2008 team. Even on the roster for the media, Oden and Durant are listed one after the other with Oden first. But that’s now only on paper and from the 2007 draft.

“Let's be realistic about it,” said USA Basketball managing director Jerry Colangelo, who is giving Oden every chance to make the team. “Durant has already established himself in two years in the NBA. He averaged 25 points a game last year in the NBA, so he's determined that he's a player to be reckoned with. Oden still has to find himself."

Will the real Sam Smith please stand up?

-- I’ve long wanted to hook up with my namesake, Sam Smith, the UNLV guard who made the first four-point play in NBA history. That was Oct. 21, 1979 for the Bulls in a 113-111 loss to the Milwaukee Bucks. I caught up with Sam, the old UNLV star guard, in Las Vegas, where he lives and is in business--Team Sudden--as a highly regarded shooting coach with local prep stars and international players. Bulls fans who remember Sudden Sam knew he was born to shoot.

Sam helped lead UNLV to the Final Four in 1977 and was drafted in the third round. He played in the Western Basketball Association, an old minor league, and then got picked up by the Bucks when the late Norm Van Lier was released. He moved on to the Bulls with old college buddies Reggie Theus and Ricky Sobers, the latter also living in Las Vegas. After playing the 1979-80 season with the Bulls and averaging 8.6 points, Sam then played a decade overseas in places like Switzerland, England, Belgium, France, the Philippines and Taiwan.

He’s proud of that four pointer and remembers it vividly coming up to the anniversary 30 years later.

“What happened is we were playing against the Bucks and Nellie (Don Nelson),” recalled Sam. “(Jerry) Sloan put me in and we were down two points. He put me in to take the last shot and was going to draw up a play for me. Reggie told Jerry to, ‘Let Sam catch and shoot wherever he’s at.’ The three was way back then. They moved it in. I was about three feet behind (the line). Brian Winters fouled me. The funny thing was he taught me that move when I was in Milwaukee to lean in and get fouled. I hit the shot, but we still lost 113-111.”

Could AI team with OJ?

-- Allen Iverson is heading to the Hall of Fame, but still can’t seem to find a team. The Grizzlies remain one of the possibilities, and there was speculation that’s why the team let go Hakim Warrick, though management has denied it. Still, it would be quite the show if Iverson went there with Zach Randolph, Rudy Gay and O.J. Mayo, all offensive minded players. Though Mayo said while at the USA Basketball mini-camp he’d welcome Iverson.

“Overall, if you come to a Memphis Grizzlies game, you don’t have a sold out arena,” noted Mayo. “Bringing Iverson in would help us from a business standpoint. A sold out arena makes you play a little harder and compete harder and helps in the win column at home. That’s a plus for the team. Iverson is a Hall of Fame player. Why not? At the end of the day, it’s not in my hands. The owner and general manager will do what’s best for the Grizzlies.

“(With Iverson) we might score 200 points,” laughed Mayo. “Coach (Lionel) Hollins is a defensive guy and we’ll follow his lead. If he wants to outscore opponents, that’s what we’ll do.”

Mayo played at USC with Bulls rookie Taj Gibson and is a big fan. Said Mayo of Gibson: “He’s definitely a hard worker. You’ll never question his work ethic or how bad he wants to win. The Bulls got a good player in Taj. He can shoot outside, he’s a great offensive rebounder with those long arms.”

I asked Mayo to compare Gibson to an NBA player. Mayo thought for a while and then said, “Tim Duncan.” I gagged a bit, though Mayo explained not to have the impact of a Duncan, but more in style.

“Taj can shoot outside,” said Mayo. “He’s a great offensive rebounder, had the jump hook, shooting of the glass, all the fundamentals and he is a great team guy and hard worker. He’s the kind of guy you wouldn’t mind going into the foxhole with.”

Coach K back in the mix

-- Duke coach Mike Krzyzewski re-upped with USA Basketball for the 2010 and 2012 Olympics, but what of 2016, which could be back in Krzyzewski’s home town of Chicago? It’s hard to imagine Krzyzewski taking a pass on Chicago, if the city gets selected, especially with USA Basketball chairman Jerry Colangelo also a local native and part of the 2016 committee. But Krzyzewski was coy about the future.

There is expected to be a selection announcement in October, and Krzyzewski did say if Chicago is selected it could determine this team’s training and exhibitions to prepare for 2010 and 2012.

“Next summer (if Chicago is selected), we probably would want to do something in Chicago,” said Krzyzewski. “Maybe preparing for the Olympics in 2012 the summer before. We’d love it. The important one is Jerry. (For me), it’s too far in the future to say.”

Coach K impressed by Rose

-- Krzyzewski also said he’s impressed with what he’s seen of Derrick Rose after Rose played against the 2008 team last summer.

“Derrick’s a much better player now,” said Krzyzewski. “Vinny (Del Negro) and his staff have done a great job with him. I don’t think the NBA gets credit with the amount of teaching they do. With Derrick you can see the maturity. I’ve talked to him about his shooting and he said, ‘Coach, I know I have to get better. I work every day.’ I said, ‘Your defense has been better.’ And there’s his commitment. I watch the NBA game a lot during the year. In trying to get to know these guys I talk to them. I said to Derrick, ‘You were a rookie who never hit the wall. How did that happen?’ He said, ‘I play basketball. That’s all I did.’ He said, ‘You hit the wall if you are doing other things.’ I think that shows his passion and love for the game.”