A pricy homecoming: Dwyane Wade’s $890,000 Illinois tax bill

A pricy homecoming: Dwyane Wade’s $890,000 Illinois tax bill

In joining the Chicago Bulls, former Miami Heat star Dwyane Wade is trading Florida’s 0 percent personal income tax for Illinois’ 3.75 percent rate, a choice many out-migrating, middle-class Illinoisans cannot afford to make.

When Dwyane Wade returns to play for his hometown Chicago Bulls next season, he’ll pay more in state income tax than he ever has in his NBA career.

While he anchored the roster for the Miami Heat for 13 years, the 12-time NBA All Star enjoyed Florida’s lack of a state income tax. But next season, Wade will be writing a sizeable check to Springfield. And the contrast overall will be noticeable – when totaled, Florida has just the 34th-highest state and local tax burden, while Illinois is tied for fifth-highest.

Wade’s two-year deal with Chicago is worth $47.5 million, giving him an annual average base salary of $23,750,000, whereas Miami offered Wade $40 million over two seasons. The difference in take-home pay, however, is not that large. When factoring in Illinois’ 3.75 percent income tax, Wade will have to fork over roughly $890,000 with estimated deductions to the state. Illinois also stands alone as the only state not giving tax credits to resident athletes for taxes paid to other states for road games, meaning Wade’s total tax bills may be even higher and the financial difference between playing in Chicago and playing in Miami is even more miniscule.

And after Wade starts paying the more than 30 local taxes Chicagoans are burdened with – including the highest sales tax in the country and record-high property taxes – that gap will shrink even more.

Given Illinois’ high tax burden, the Bulls’ offer had to be higher to make it worth taking from a financial standpoint.

Of course, there are several other, nonfinancial factors at play for NBA free agents, many of which influenced Wade’s decision to sign with Chicago. And those factors can outweigh financial aspects with that much money already on the table. In fact, the NBA’s top free agent, Kevin Durant, who elected to sign with the Golden State Warriors, could have actually made more after-tax money had he signed with the San Antonio Spurs, Miami Heat, Boston Celtics, or re-signed with the Oklahoma City Thunder – all teams that were courting him. Instead, to play for a better team, Durant will pay California’s top tax rate of 13.3 percent.

Wealthy, star athletes can afford to make those decisions. Wade is able to make the choice to play for his hometown team because the tax hit he will take returning to the Land of Lincoln doesn’t affect his quality of life as much as it would many others. But middle-class taxpayers – when faced with the choice between high-tax Illinois and low-tax alternatives – often must choose the latter.

In 2012, Texas and Florida, both states without state income tax, each saw more than 20,000 Illinoisans enter their states. Florida took in a net $1.1 billion in adjusted gross income from Illinois that year, benefiting more than any other state.

The burdensome obligations put on taxpayers have led to a mass exodus from Illinois, including in record numbers from the Chicago area. And Illinoisans who remain are faced with politicians taxing a shrinking base to compensate for their own financial mismanagement.

A successful professional athlete such as Wade – who has made more than $150 million in basketball contracts alone in his career – can afford to pay an additional $890,000 to return home. But for many Illinoisans struggling under a heavy tax burden in a state lacking opportunity, the best option has unfortunately been to leave home.

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