Derek Jeter's Taxes

So the state of New York is suing the great Florida baseball player Derek Jeter to try to collect New York taxes from him. We can certainly sympathize with those who sense it would be wonderful were Mr. Jeter prepared to live in New York. He's one of the great baseball heroes of all time. But he is a free person, and he's nothing if not capable of keeping his eye on the ball. So he can see the economic advantages of choosing to make his home in Florida.

We're not against the state enforcing its tax laws, but that will only go so far. Governor Spitzer would do better to stop hauling rich Floridians into court to try to wring every last nickel from them and spend his political capital changing New York's tax laws so that it's Florida's government chasing New York rich people who are choosing to declare New York as their residences.

One could start with the income tax. In New York state, the top rate is 6.85%, with a New York City income tax rate of 3.648% atop that, for a total individual income tax rate of 10.498%. Mr. Jeter's home of Tampa, Florida, on the other hand, has no state or local income tax. If Mr. Jeter wants to go shopping in his hometown of Florida, he'll pay 7% sales tax, lower than the 8.375% sales tax in New York City. If he wants to fill up his car with gas, the 32.6 cents a gallon state taxes in Florida are less than the 40.9 cents a gallon state taxes in New York, according to the annual survey by the American Petroleum Institute.

If Mr. Jeter dies, the estate tax in New York applies to estates of more than $1 million, while Florida has eliminated its death tax. A March 2007 article in The CPA Journal, the journal of the New York State Society of Certified Public Accountants, headlined, "A Change in Domicile from New York to Florida Can Help Minimize Taxes," estimates that for someone with an estate of $10 million, the total estate tax liability will be $577,600 more in New York than in Florida.

All told, the Tax Foundation reckons New York's state and local tax burden at 13.8%, and Florida's at 10% (Why, even Florida's cigarette tax, at 33 cents a pack, provides an advantage against the $3 in excise that New York City and State put on a pack of cigarettes). Many of us prefer New York, which has more to offer in terms of cultural and intellectual life than Florida, a state noteworthy mainly for its alligators and anhingas. We prefer New York apples to Florida oranges, Manhattan to Disney World, the Upper East Side to Palm Beach. But no doubt Mr. Jeter has his rationale in making Florida his home, and the way to get him to the Empire State is not to have the tax man haul him into court. It's to change the rules so that champions like him want to declare New York rather than Florida as their home.