How might state income taxes affect Ryan Callahan's salary demands?

Kim Klement-USA TODAY Sports

It's not as much as people might think.

People keep saying this: Florida has no state income tax, so Ryan Callahan could be willing to take less to play for the Tampa Bay Lightning than he was asking from the New York Rangers. He was asking, it should be noted  something around $6 or $6.5 million a year for 6 years. Lightning fans in their more rational moments want Callahan to sign for closer to $5M for 4 or 5 years.

Earlier today, Tampa Bay Times columnist Joe Smith alluded to the idea in his report on talks between the Lightning and Callahan. But it doesn't actually pass the smell test.

Let's do a little thought experiment here. Let's examine exactly how much of a difference Florida's no state income tax might reasonably make on a professional hockey player's salary demands.

The State of New York's tax rates are a bit complicated. They have a progressive tax bracket system that charges a different rate at different levels of income, and you go through them step by step.

In other words, a married taxpayer filing jointly would pay:

  • 4 percent on the first $16,450 of taxable income.

  • 4.5 percent on taxable income between $16,451 and $22,600.

  • 5.25 percent on taxable income between $22,601 and $26,750.

  • 5.9 percent on taxable income between $26,751 and $41,150.

  • 6.45 percent on taxable income between $41,151 and $154,350

  • 6.65 percent on taxable income between $154,351 and $308,750

  • 6.85 percent on taxable income between $308,751 and $20,058,550.

  • 8.82 percent on taxable income of more than $20,058,550.

How much would a professional hockey player making $6 Million a year pay in New York State taxes? That depends on his deductions, exemptions, and a whole host of other things that affect what your actual taxable income really is. It also bears noting that living in Florida doesn't remove any tax owed to any other state he works in, and he works and earns money in several states and one foreign country. He may also own a home in New York state, since he grew up in Buffalo. (Pro athletes have very complicated tax situations.)

But we're trying to figure out what the maximum amount Callahan might save by moving to a no-tax state. We'll assume that he is either financially idiotic or that he just doesn't want to bother, so he takes no deductions other than the standard deduction and that he has nothing else he's going to declare on his taxes. He just has salary and he pays every cent owed without complaining.

On a $6 Million a year salary here's what he'd pay under New York's tax structure, claiming only a standard deduction for himself and his wife (married, filing jointly):

Tax Bracket

Calculation

Marginal Tax


0.

$0.00+

$16,450.00 × 4%

$658.00

1.

$16,450.00+

$6,150.00 × 4.5%

$276.75

2.

$22,600.00+

$4,150.00 × 5.25%

$217.88

3.

$26,750.00+

$14,400.00 × 5.9%

$849.60

4.

$41,150.00+

$113,200.00 × 6.45%

$7,301.40

5.

$154,350.00+

$154,400.00 × 6.65%

$10,267.60

6.

$308,750.00+

$5,676,250.00 × 6.85%

$388,823.13

This is a total of $408,394.35. That is the maximum amount that he could possibly save by working in a no-tax state rather than in New York. In reality, a pro athlete's taxes are far more complicated and his taxable income would likely be much lower, meaning the amount he'd save by moving to a no-tax state would be less.

So living and working in Florida could be expected to save Ryan Callahan something less than $400,000.00 in state income taxes, quite possibly much less, depending on how his money's invested and what exemptions he has. The assumption that he'd be willing to then discount his salary demands by that same amount is just that, an assumption.

But the most that the state tax scenario might possibly affect his salary demands (unless he doesn't have a calculator, basic math skills, and the ability to Google New York State income tax rates) is less than half a million dollars. In other words, from $6M a year to $5.6M a year. That's not a huge difference and definitely not enough by itself to bring his salary demands down to a reasonable number like $5M. It's much more reasonable to estimate that at something closer to $5.7M or $5.75M.

In reality, of course, the situation is far more complicated than this scenario is. But there is simply no mathematical way for Florida's lack of state income tax to make up for the difference between what Callahan was reportedly demanding when negotiating with the New York Rangers and what people are positing is a reasonable salary for Steve Yzerman to offer him.

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