States tax income where you live and where you work. When you pay taxes to a state where you work for part of the year but don’t live, most home states offer you a credit (up to the amount you’d have paid in the home state) for the taxes paid to the state where you work. That way, workers can avoid double taxation.
Hill didn’t make his decision based solely on taxes, “but he’s surely being truthful when he says it factored into his analysis,” Walczak said.
In this era of increased workplace flexibility, many employees can live and work from just about anywhere, so taxes often play major factor in decisions of plenty of people who aren’t sports superstars like Hill.
But some observers say that taxes even take a toll on the performance of the professional sports teams: One recent study found that for each percentage point increase in state income tax rates, team winning declines by 0.7 percentage points.
“Recognizing the enhanced mobility of this new economy, dozens of states have cut the rates of major taxes in the past two years,” Walczak said. “States that cling to uncompetitively high taxes may find themselves losing out on more than just Tyreek Hill.”