Josh Barro has written an excellent post on one reason why LeBron James may have chosen Miami over New York city:

In the disco era, the top federal income tax rate was 70%, but you could fully deduct state and local income taxes against your federal tax. So while earners in the LeBron bracket got hit with nearly 20% income taxes in New York City, they effectively got 70% of that money back from the feds.
As a result, the top effective tax rate in the city — the excess tax you paid because you lived in New York City instead of a no-income-tax state — was just 5.9%. Moving to Florida would save you some money, but you couldn’t escape the astronomical federal taxes.

Over the intervening years, as Josh explains, lower federal tax rates have eroded the value of the state and local tax deduction, and the Obama administration plans to further curb deductions for those in the top tax brackets.

Because of these changes, New York City taxpayers in the top bracket can expect to face an effective state and local tax rate of 9.9% in 2011, four points higher than in the late 1970s. No wonder LeBron signed with the Heat.

Of course, Josh is more interested in the broader implication of high marginal tax rates at the state level.

Researchers at Boston College found that New Jersey experienced $70 billion in net outmigration of wealth in the five years following a 2003 “millionaire’s tax” increase. While roughly the same number of households moved in and out of the state, departing households had net worth on average 70% higher than arriving households.
Wealthy people can react to tax increases by taking their wealth to friendlier jurisdictions. If you’re Derek Jeter or David Wells, you can leave without really leaving — Jeter makes his primary residence in Tampa, and Wells also lived in the Sunshine State during his Yankee tenure.
But most entrepreneurs don’t have that option because they need to be in New York more than 81 days per year if they want to conduct their business here.

New York city has amenities that make it worth the high tax burden for many of its ultrarich citizens — hence Mayor Bloomberg’s notoious description of New York as a “luxury good.” But that isn’t necessarily true for the kind of scrappy entrepreneurs who create jobs. One “solution” could be to return to the cripplingly high federal tax rates of the 1970s. My guess is that Florida and other states like it will soon see their tax burdens approach New York levels. The states that managed to reduce spending while improving the quality of public services — states like Indiana — will have a clear advantage in this environment, provided that they can start closing the amenities gap.