Taxifornia: -$12,000,000 -- Dwight Howard: $8,000,000
NBA star Dwight Howard had no shortage of teams trying to sign him after a disappointing season with the Los Angeles Lakers. One factor likely influencing the All-Star center's decision to chose Houston (with no state income tax) over California is the Golden State's high tax rate.
L.A.'s warm weather and beaches come at a price, namely a 13.3 percent top tax rate on personal income. How much of a difference does 13.3 percent make?
A lot.
Using a direct comparison of the two salaries over four years, the Lakers with the excess cap space would be able to offer the higher payout at $91 million as opposed to Houston's $87.6 million. After 4 years, Howard would pay $12 million in taxes if he remained in California; however, he would only pay $600,000 with a Texas-based team.
Altogether, Howard will actually come out with $8 million more in income in Texas than he would have in L.A.
For more on this, see: The Week and The Joy of Tax Law.
