One of the most common sentiments in the storm around Jeremy Lin seems to be that the Knicks should not match the Rockets' offer because the Knicks would have to pay a massive luxury tax hit as a result of overpaying Lin during the third year of his contract. I think this viewpoint fails to see the big picture.
If the Knicks match Lin's offer, they will take a massive luxury tax hit as a result of overpaying Lin AND ALMOST EVERYONE ELSE ON THE TEAM during the third year of Lin's contract. Outside of Iman Shumpert, who is still on his rookie deal, and J.R. Smith and his excellent Twitter feed, the Knicks are overpaying everyone on the roster in relation to the amount they help produce victories. These overpayments vary from the extreme (Amare Stoudemire) to the slight (Tyson Chandler).
This offseason, the Knicks have had no problem overspending on guys like Steve Novak, Raymond Feltonsanity, Jason Kiddtoxication and Marcus Camby. For the last three players, all of whom are past their athletic peaks, they also gave up almost all of their admittedly few trade assets.
However, now they're suddenly reluctant to overpay Jeremy Lin. Granted, Lin's superstar streak last season was most likely an anomaly, but unlike Felton and Kidd, his performance on the whole was above average, his game has room to grow, and you can make a good case that he will be an above average NBA guard in the future.
What's the market for that kind of player? George Hill, a solid but not special guard, signed with Indiana earlier this offseason for $40 million over five years. Lin's deal is worth slightly more money annually and shorter in length than Hill's. Yes, the Knicks would have to pay the luxury tax in year three but that's a matter for Jim Dolan's wallet, all the sports marketing gurus say Lin would generate the Knicks way more money than any luxury tax penalty they might incur.
IMO the above material, combined with the fact that people like Mike Lupica, Mitch Lawrence and Stephen A. Smith came out against matching, makes matching the offer a no brainer.
I have a hard time seeing why the Knicks wouldn't match unless they are letting emotional factors get involved, which is always possible with Dolan and his flunkies.