9 States with No Income Tax - NHL CAP

[SA16]

Because contrary to popular belief, it is about cost control for the league. Nothing to do with competitive balance. I know Bettman touted that when the cap started and everyone with a brain knew it was pure b.s. Players on the NY and California teams paying higher taxes does not change how much the owners are paying out.

It's not about cost control unless you believe billionaire owners are not aware of how to properly create a budget.

 

[triggrman]

It's not about cost control unless you believe billionaire owners are not aware of how to properly create a budget.

Cost certainty was for sure the way it was billed originally. It wasn't about budgeting it was about remaining compactivity while being in the black. Also, how many billionaire owners does the NHL have?

 

[Tysonson3]

preds and stars are hiding

Nobody tell him, we might still be able to get away with it

 

[pbgoalie]

Nobody tell him, we might still be able to get away with it

Shhhhhh

 

[Lazlo Hollyfeld]

Cost certainty was for sure the way it was billed originally. It wasn't about budgeting it was about remaining compactivity while being in the black. Also, how many billionaire owners does the NHL have?

At least 20 according to this and other articles.

The 23 richest billionaire NHL franchise owners — and how they made their fortune

 

[patnyrnyg]

Not sure what you meant by this. I'm just saying you can always calculate the estimated cap hit based on the yearly contract amount. What the players actually get payed wouldn't matter in this case, it's simply to stipulate a caphit that takes into consideration a theoretical taxation amount.

So a player in Cali whose contract says $10M/year will have a caphit of whatever a 10M income would receive after tax. He won't actually get payed different.

There are too many variables. Not easily done. Local tax laws change and when they do, they change mid-season, secondly they have a jock-tax where they pay taxes in each state they play. Different states have different rules for how these are calculated. Now, a player gets traded from the Rangers to the Red Wings in December. Rangers made their trip to California in November and the player has already played in California for the season. Red Wings do not visit the 3 Cali teams til March. This player's calculation is different than the player coming from the Red Wings to the Rangers.

In NY, the tax rate for someone earning $1,077,550 to $5,000,000 is $72,166 plus 9.65% of the amount over $1,077,550. For someone making $5,000,001-$25,000,000 it is $450,683 plus 10.3% of the amount over $5,000,000. However, it is based on his taxable NY income. Then there are different write-offs, and each person's write-offs are different. I guarantee the money MacKinnon spends on his nutritionist and massage therapist are all written off as business expenses. Realistically speaking, they would need to change the cap to run from Jan 1st-Dec 31st rather season to season and then calculate AFTER either April 15th in the US and whatever tax deadline day in Canada is (if they have one, honestly do not know). Then, you can actually calculate each player's after-tax earnings and determine each team's expenditures, and then calculate whether the players are owed more or have to pay more to escrow. Which in-turn screws up their actual earnings and impacts their tax liabilities the following year.

 

[patnyrnyg]

It's not about cost control unless you believe billionaire owners are not aware of how to properly create a budget.

It is 100% about cost control. Some owners do not care about making $ year to year and are willing to spend wildly to win. Others are very cost/budget conscious.

 

[The Macho King]

It is 100% about cost control. Some owners do not care about making $ year to year and are willing to spend wildly to win. Others are very cost/budget conscious.

(The ones that spend see their franchise value increase far more than the budget conscious teams anyway so they're getting a huge ROI, it's just not as liquid)

 

[patnyrnyg]

Gross salary cap would be different

Net salary cap would be the same everywhere

So the money actually coming out of the owners pockets would be different from team to team? Exactly what they DON'T WANT

 

[x Tame Impala]

The TSN propaganda against taxes is hilariously dumb. Can’t believe it’s coming from a major news network and they’re being this blatantly obtuse about it.

The counter arguments to incorporating tax-rates into the cap are numerous and undeniable. You have to try and not see them

 

[Gamimenos]

There are too many variables. Not easily done. Local tax laws change and when they do, they change mid-season, secondly they have a jock-tax where they pay taxes in each state they play. Different states have different rules for how these are calculated. Now, a player gets traded from the Rangers to the Red Wings in December. Rangers made their trip to California in November and the player has already played in California for the season. Red Wings do not visit the 3 Cali teams til March. This player's calculation is different than the player coming from the Red Wings to the Rangers.

In NY, the tax rate for someone earning $1,077,550 to $5,000,000 is $72,166 plus 9.65% of the amount over $1,077,550. For someone making $5,000,001-$25,000,000 it is $450,683 plus 10.3% of the amount over $5,000,000. However, it is based on his taxable NY income. Then there are different write-offs, and each person's write-offs are different. I guarantee the money MacKinnon spends on his nutritionist and massage therapist are all written off as business expenses. Realistically speaking, they would need to change the cap to run from Jan 1st-Dec 31st rather season to season and then calculate AFTER either April 15th in the US and whatever tax deadline day in Canada is (if they have one, honestly do not know). Then, you can actually calculate each player's after-tax earnings and determine each team's expenditures, and then calculate whether the players are owed more or have to pay more to escrow. Which in-turn screws up their actual earnings and impacts their tax liabilities the following year.

None of this. My proposal is simply at time of signing. Remains that way for the duration of the contract. In the event of a trade, you update the cap hit at the free agent date or something like that.

Take an income of the cap hit amount, no writes offs nothing, that's the player's cap hit.

 

[Lt Dan]

The TSN propaganda against taxes is hilariously dumb. Can’t believe it’s coming from a major news network and they’re being this blatantly obtuse about it.

The counter arguments to incorporating tax-rates into the cap are numerous and undeniable. You have to try and not see them

The media being the media

 

[tucker3434]

None of this. My proposal is simply at time of signing. Remains that way for the duration of the contract. In the event of a trade, you update the cap hit at the free agent date or something like that.

Take an income of the cap hit amount, no writes offs nothing, that's the player's cap hit.

No write offs, deductions, or credits? Now you’re overstating the tax burden of the higher tax areas and flipping the advantage over to them.

 

[Gamimenos]

No write offs, deductions, or credits? Now you’re overstating the tax burden of the higher tax areas and flipping the advantage over to them.

How so? Everyone has these.

 

[dekelikekocur]

How so? Everyone has these.

To some degree everyone has them but their AGI could be widely impacted by the types.

It comes down to the owners not caring or thinking it's worth the added lift to make it happen and then NHPLA not caring enough.

As fans we need to realize that our priorities/perceived issues are not typically represented by the business owners and the employees representation.

 

[MBH]

That's true. In theory, the league could give one team a $90M cap and another team a $75M cap (as long as leaguewide salaries = 50% of revenue as defined in the CBA). Here are four reasons that isn't going to happen:

1. Wasteful spending - As I mentioned in my previous post, the calculation of a player's after-tax earnings is far more complex than many people realize. It would require thousands of hours of lawyer/accountant time each year to deal with this. The annual fee would be at least several hundred thousand dollars - possibly over a million. The owners would be throwing money away over a problem that nobody (aside from a few fans on message boards) seem to care about.
2. Bad optics - A small number of passionate fans might understand why the salary cap varies on a team by team basis. But casual fans would struggle to understand why their team has a lower cap than another (especially when no other sports league in North America does that). Optics count, and this would create the impression that there isn't a level playing field.
3. Difficulty of implementation - Compliance with the salary cap is already challenging enough when there's one number that applies to everyone. This adds an unnecessary level of complexity. Mid-season trades would be particularly challenging to deal with. Why would teams voluntarily agree to make it more difficult for their GM's to do their job?
4. Futility of negotiation - If it's true that some teams have a disadvantage, that also means that some teams have an advantage. This is a competitive business. Teams that have an advantage based on the current system aren't going to agree to give it up due to an appeal to "fairness". To the extent that an advantage actually exists, any negotiation would be doomed from the start as the teams owners that benefit from the current system would insist on the status quo. You'd never get enough owners on board to implement this change.

I agree that there are small differences in the effective after-tax cap between different teams. But it's one of a multitude of factors (cost of living, weather, sponsorship opportunities, quality of schools, etc) that realistically can't be adjusted for. It's a completely impractical suggestion, which is probably why we haven't seen this in the MLB, NFL or NBA either.

1 reason it won't happen.
Owners have no reason to want it.

 

[Elysian]

I've posted this before in a different thread, but in Texas if you're a homeowner then your tax burden is higher due to the high property taxes (and high property values) here. I've compared Texas to Ohio, which has a state tax, and my tax burden will be much much lower in Ohio than Texas, thanks to property tax. The state tax and property taxes in Ohio don't even come close to what I'm paying in property taxes in Texas, and my county hasn't even caught up to the market value of my home, my property taxes will double by the time they do.

If you only want to hyper focus on state income taxes, you do you, but overall tax burden is much more than just state income tax.

 

[SA16]

It is 100% about cost control. Some owners do not care about making $ year to year and are willing to spend wildly to win. Others are very cost/budget conscious.

What you just said is competitive balance not cost control. If some owners are willing to operate at a loss then the competitive balance is not there. If all teams operate within their means and budgets it is no different than the league having a cap.

 

[patnyrnyg]

What you just said is competitive balance not cost control. If some owners are willing to operate at a loss then the competitive balance is not there. If all teams operate within their means and budgets it is no different than the league having a cap.

It absolutely is cost control. The leagues wants the players to only receive a set portion of the revenues. Without a cap, they would pay much more. If it was about competitive balance, they would play under the same cap in the play-offs.

 

[patnyrnyg]

None of this. My proposal is simply at time of signing. Remains that way for the duration of the contract. In the event of a trade, you update the cap hit at the free agent date or something like that.

Take an income of the cap hit amount, no writes offs nothing, that's the player's cap hit.

So, you just want to do an estimate of state tax and deduct that from the player's AAV? What about other local taxes. Like I said, NYC has an income tax, Nassau County does not. What about differences in federal taxes for the US vs Federal taxes for teams in Canada?

Again, do some research and bring actual numbers to show how much of an advantage the Stars, Kraken, Lightning, and Panthers hold over everyone.

 

[Golden_Jet]

It absolutely is cost control. The leagues wants the players to only receive a set portion of the revenues. Without a cap, they would pay much more. If it was about competitive balance, they would play under the same cap in the play-offs.

Yep , and the only way for a cap in the playoffs is to lower the regular season cap, to keep 50/50 HRR.

 

[Gamimenos]

So, you just want to do an estimate of state tax and deduct that from the player's AAV? What about other local taxes. Like I said, NYC has an income tax, Nassau County does not. What about differences in federal taxes for the US vs Federal taxes for teams in Canada?

Again, do some research and bring actual numbers to show how much of an advantage the Stars, Kraken, Lightning, and Panthers hold over everyone.

To be clear I didn't say it was a problem, I'm saying if it is, there can be simple ways to integrate this into the system. If you want to know what I think: people of any industry in that income bracket have many ways to minimize taxation far more effectively than me.

So like I said, apply it to everyone. State tax + federal tax, in Canada too. Provincial tax + federal tax. Omit the rest. This is purely for salary cap. Even if there are no state taxes like people say is the case in Florida, the cap hit of those teams' players will drop based on the federal tax rate.

 

[BRUINS since 1995]

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming — have no income taxes "state".

Kraken, Knights, Panthers, and the Lightning.

Each of these teams have a clear advantage over the rest of the league. Each of these teams work within CAP framework plus added room when one factor's tax break to negotiate contracts.

Is this something the NHL will consider next collective agreement?

I sure do wish a big no. 9 state's with no taxes... I wish tax incomes were lower everywhere!

 

[DudeWhereIsMakar]

Canadian teams pay US dollars, but collect CDN dollars in revenues.

Yes, they collect USD in CAD in Canada, but doesn't it switch on whichever one is higher? Or is it just strictly based on USD?

 

[tucker3434]

To be clear I didn't say it was a problem, I'm saying if it is, there can be simple ways to integrate this into the system. If you want to know what I think: people of any industry in that income bracket have many ways to minimize taxation far more effectively than me.

So like I said, apply it to everyone. State tax + federal tax, in Canada too. Provincial tax + federal tax. Omit the rest. This is purely for salary cap. Even if there are no state taxes like people say is the case in Florida, the cap hit of those teams' players will drop based on the federal tax rate.

Tax rates are maximums that nobody pays. So you're just giving extra advantages to the high tax areas. For example, highest tax rate in NY is 10.9%. Florida's tax rate is 0%. You can't just assume that a Florida salary of $89.1 is the same as a NY salary of $100, because there isn't a single person paying 10.9% of their total gross income to the state of New York. The person getting paid $100 in NY is coming out ahead.