An actual breakdown on taxes per team

[MadLuke]

A lot, and I mean a lot of players, don't live in the city they play in. Players avoid making their place of residency the city they play for,

Could be different in some place, but generally property tax do not take into account if you live in the house or not, or have it has a principal residency or not, the owner pay the tax.

These kind of situations are super common in the contracts people bitch about (Star contracts). Cost of Living, Property Tax, Sales Tax, education, climates, etc are all taken into account for contracts.

If that is true that would mean that people bitching about would be 100% right, I am not sure if it is really all taken into account, there also some ego and comp of the raw numbers of similar player that signed recently that could be going on.

And obviously that would be what the players would want to do, but their agents have little to gain about any of that and them it is all about the biggest raw numbers (they could even spread the idea that it does not really matter at the end financially where you play, always take the biggest contract), they will not leave there and take a cut on the gross income not the net income of the player.

 

[tarheelhockey]

Not sure to follow here, the question is where it is more expensive to live,

No, that’s not the question. The topic is tax rates. You’re the one bringing up all these other cost of living topics.

The idea that we should adjust the NHL salary cap according to local taxes is laughable. The idea of adjusting it for overall cost of living is insane.

 

[Dennis Reynolds]

I have no real comment other than I wanted to say thanks for putting this together.

 

[MadLuke]

No, that’s not the question. The topic is tax rates. You’re the one bringing up all these other cost of living topics.

I quoted your message in this thread saying...:
High property and sales taxes can absolutely offset a low income tax, if you’re a person who owns property (which most established NHL players do).

This cost of living overall topic started in the few first message on this thread (and the logic was sound, if really cost of living in low tax place was higher to balance out the tax rebate that would made team cap advantage less clear, player would not accept a lower contract to play there in that case)

The idea that we should adjust the NHL salary cap according to local taxes is laughable. The idea of adjusting it for overall cost of living is insane.

I am not sure how serious people are about this, does any cap pro sport do something like this, the math about it sound like a math hell, and now the team with the big tax adjustment tax rate paid America FA with bonus instead of salary with some twist and now we complain about them having the cap advantage...

And to note even without an salary cap, that advantage would still be fully present (team all have some form of internal cap), back in the days when the Canadians dollars was in a rough spot that was the talking point, pre-cap.

 

[DistantThunderRep]

I quoted your message in this thread saying...:
High property and sales taxes can absolutely offset a low income tax, if you’re a person who owns property (which most established NHL players do).

This cost of living overall topic started in the few first message on this thread (and the logic was sound, if really cost of living in low tax place was higher to balance out the tax rebate that would made team cap advantage less clear, player would not accept a lower contract to play there in that case)



I am not sure how serious people are about this, does any cap pro sport do something like this, the math about it sound like a math hell, and now the team with the big tax adjustment tax rate paid America FA with bonus instead of salary with some twist and now we complain about them having the cap advantage...

And to note even without an salary cap, that advantage would still be fully present (team all have some form of internal cap), back in the days when the Canadians dollars was in a rough spot that was the talking point, pre-cap.

No other sport or fans complain about taxation other than Canadian hockey fans

 

[MadLuke]

No other sport or fans complain about taxation other than Canadian hockey fans

Maybe less, but when I googled to try to have some answer to my question, people complaining about it came up:

https://money.com/nfl-state-taxes-success/

Wondering If Your NFL Team Will Make the Playoffs? Take a Look at Your State's Tax Code​

 

[DistantThunderRep]

Maybe less, but when I googled to try to have some answer to my question, people complaining about it came up:

https://money.com/nfl-state-taxes-success/

Wondering If Your NFL Team Will Make the Playoffs? Take a Look at Your State's Tax Code​

Did you actually read the comments?

 

[BLONG7]

The US Tax code is thousands of pages long, that doesn't include state and local taxes. Unless you know what these guys are doing with charitable giving, retirement accounts, and a million other things, you're not going to have any clue what any of them are paying in taxes.

Bang on.................and there are so many complex variables.
Some of the higher taxed markets, probably have a guy have to hire a big time tax accountant to help minimize his taxes.
No doubt abut it though, there are states that have an advantage for sure.

 

[blankall]

Something that equalizes things a bit for Canadian teams that never gets talked about is the USD factor.

All salaries are paid in USD - so when Jonathan Huberdeau signs an $84M contract, it’s actually $114M Canadian.

And while Huberdeau can obviously move wherever he wants when he’s done playing, he’s a citizen of Canada, and Canadian currency is probably what he’ll be using for most of his life.

So by minimizing his foreign tax obligations, and doing whatever sorcery rich folks use to avoid paying taxes, I’m sure the next hundred generations of Huberdeaus will be well taken care of.

Generational wealth doesn't last as long as people think. It gets divided over time as you have more descendants. For example, my father already has 9 grand children. Also you'd be surprised at what percentage of the population is absolutely horrible with money and has zero self control. It only takes one bad descendant to blow their share.

They call it the 3rd generation course, but 70% of families lose their wealth in the second generation and 90% in the third.

Obviously the more wealth you have the harder it is to blow through it, but the average athlete doesn't stay rich for 100 generations.

 

[UConn126]

The tax vs. cap argument is such bullshit. It completely ignores that places with low to no income tax have sky high property tax and higher sales tax to make up for it. Plus, these guys probably all have financial advisors making sure they pay as little tax as possible. It's the millionaire way.

 

[dekelikekocur]

Did you actually read the comments?

He's posting Reddit links, of course they didn't read anything but the title.

 

[a mangy Meowth]

Anyone who pays taxes knows that state taxes are miniscule compared to federal so this is all just a bullshit discussion anyways.

 

[Crede777]

If the league were actually concerned about players "taking less" to play somewhere specific - and this extends beyond state/provincial income tax to things like weather and team success - then what they should do is revamp UFA in such a way that teams have a period during which they may submit offers or bids on a player and then the player must accept an offer that is within x% of the highest annual cap hit. Obviously teams would have the ability to resubmit offers after the initial bids became public. And teams would be able to negotiate and extend players that are on their team up to a year in advance of free agency. But that would protect against players essentially forming super teams like in the NBA.

This is basically golden handcuffs if a team is determined to retain a player. But hey, that player is making more money than they otherwise would have so no harm.

Example: Austin Matthews reaches free agency. Teams submit bids for 1 week. It turns out that Toronto submitted a bid with an AAV of $13 million. As such, Matthews cannot accept an offer from Tampa with an AAV of $10 million. If Tampa wants to sign Matthews, they have to update their offer such that the AAV is at least $12.5 million. If they can't fit that under their cap, they either need to move someone from their roster or they can't sign him.

 

[Legion34]

Between high property AND high sales tax, you can eat away that $700K pretty damn fast living an NHL lifestyle. Methot was referring to his income tax bill, not the total cost of living.

And FWIW, Dallas has gotten a lot more expensive since he played there pre-COVID. So has Florida and the rest of the sunbelt. I actually remember attending a meeting in Raleigh circa 2020 when my VP noted that we could no longer recruit from NY based simply on cost of living. It’s not as simple as “low income tax = more money”.




An NHL player would have to be pretty stupid to rent long-term.

You are suggesting that a player pays 700 thousand dollars more in property tax?

1.) The average 2500 sq foot house in Toronto suburbs cost between 1.5 and 2 million.

Down town Toronto prices are insane.


2.) some players have to rent. Matthews to try to get some tax advantages he can’t buy. He has to prove greater financial ties to the us. Owning property can be a mistake.

It’s beyond the point. The NHL didn’t make a cost of living cap. They created a salary cap.

 

[dekelikekocur]

You are suggesting that a player pays 700 thousand dollars more in property tax?

1.) The average 2500 sq foot house in Toronto suburbs cost between 1.5 and 2 million.

Down town Toronto prices are insane.


2.) some players have to rent. Matthews to try to get some tax advantages he can’t buy. He has to prove greater financial ties to the us. Owning property can be a mistake.

It’s beyond the point. The NHL didn’t make a cost of living cap. They created a salary cap.

So you're arguing we should only be looking at SOME things but not THOSE things which impact a player's bottom line?

 

[tarheelhockey]

I quoted your message in this thread saying...:
High property and sales taxes can absolutely offset a low income tax, if you’re a person who owns property (which most established NHL players do).

This cost of living overall topic started in the few first message on this thread (and the logic was sound, if really cost of living in low tax place was higher to balance out the tax rebate that would made team cap advantage less clear, player would not accept a lower contract to play there in that case)

Again though, different areas have higher or lower costs of living for a reason. It’s not like home values are assigned at random. Yes you can buy a bigger house in Raleigh for $500K than you can in San Jose for $1.5M, but you are not only buying the physical house. You’re buying the weather, the beaches, the mountains, the lifestyle. You’re working in the world HQ of a software company instead of a regional branch. Everyone on the road is driving Teslas instead of Toyotas. There are 4 major league teams instead of one. You have access to dozens of Michelin starred restaurants instead of zero.

So yes, it’s going to be a lot more expensive in Vancouver than in Dallas — because it’s a nicer place to live and nice things are expensive. “Evening the playing field” by artificially eliminating those economic differences sounds an awful lot like stacking the deck so that certain markets have ALL the advantages.

I am not sure how serious people are about this, does any cap pro sport do something like this, the math about it sound like a math hell, and now the team with the big tax adjustment tax rate paid America FA with bonus instead of salary with some twist and now we complain about them having the cap advantage...

And to note even without an salary cap, that advantage would still be fully present (team all have some form of internal cap), back in the days when the Canadians dollars was in a rough spot that was the talking point, pre-cap.

I think some people really are serious about this stuff, but it’s not a conversation to be taken seriously. Tax rates are among the most important decisions we make as a society, and a consequence of how we define the public and individual good. Somehow we have this little group of people who think it’s important to argue over the impact on their favorite sports team, because they really need to sign Marc Methot at a $700K discount this summer. It’s a silly argument at heart and it’s not going anywhere, because it would be completely impractical to make these adjustments even if the league cared to do so.

You are suggesting that a player pays 700 thousand dollars more in property tax?

That’s not what I wrote. Try again.

 

[End on a Hinote]

Anyone who pays taxes knows that state taxes are miniscule compared to federal so this is all just a bullshit discussion anyways.

You mean that the federal taxes are increase for citizens in a no state tax state? I'm in Canada so I don't know how it works.

 

[MadLuke]

Again though, different areas have higher or lower costs of living for a reason. It’s not like home values are assigned at random. Yes you can buy a bigger house in Raleigh for $500K than you can in San Jose for $1.5M, but you are not only buying the physical house. You’re buying the weather, the beaches, the mountains, the lifestyle.

Sure ? But what does it change to the conversation about cost of living difference existing or not.

Is the point the negative attraction effect of the high cost of living place like Vancouver-SanJosee-New York is well-balanced for being more appealing to players for the reason they cost more, in a lot of case I imagine so, California team must have little issue attracting free agents and when you look a McDavid mansion footage, your first thought is not wow he is so lucky to have paid a fraction than what it would have cost in Vancouver or NewYork to build this.....

But there also laws limiting supply of goods and services (specially housing) that can be part of the cost explanation, not just demand but supply.

but I was answering the very question, does it exist in North America place more expensive to live in (specially if you had income tax to the equation) than other to the point employer would pay more to attract worker (if you want to find cops or teacher to work in Manhanttan for example, because the nicer to live does not fully make up for it), yes and it strange to even debate this.

Tax rates are among the most important decisions we make as a society

With Modern monetary theory it became mostly a way to destroy X amount of money to control inflation (for country with their own money) and removed a lot of cachet of it.

 

[MadLuke]

Anyone who pays taxes knows that state taxes are miniscule compared to federal so this is all just a bullshit discussion anyways.

If you leave in a low taxes states....

In Québec that is really not true, before doing tricks on a 2 millions income:

Total income	$2,000,000
Federal tax	$529,264
Provincial tax	$502,630

Ontario

Total income	$2,000,000
Federal tax	$633,746
Provincial tax	$394,583

California for a 8 millions a year big star
Federal : 2.9 millions
State......: 1.14 millions

 

[MadLuke]

Did you actually read the comments?

Some of them yes, like here, lot of people say it does not matter, some people do say it give team with better tax environment a slight advantage. Quite similar.

 

[dekelikekocur]

Again though, different areas have higher or lower costs of living for a reason. It’s not like home values are assigned at random. Yes you can buy a bigger house in Raleigh for $500K than you can in San Jose for $1.5M, but you are not only buying the physical house. You’re buying the weather, the beaches, the mountains, the lifestyle. You’re working in the world HQ of a software company instead of a regional branch. Everyone on the road is driving Teslas instead of Toyotas. There are 4 major league teams instead of one. You have access to dozens of Michelin starred restaurants instead of zero.

So yes, it’s going to be a lot more expensive in Vancouver than in Dallas — because it’s a nicer place to live and nice things are expensive. “Evening the playing field” by artificially eliminating those economic differences sounds an awful lot like stacking the deck so that certain markets have ALL the advantages.




I think some people really are serious about this stuff, but it’s not a conversation to be taken seriously. Tax rates are among the most important decisions we make as a society, and a consequence of how we define the public and individual good. Somehow we have this little group of people who think it’s important to argue over the impact on their favorite sports team, because they really need to sign Marc Methot at a $700K discount this summer. It’s a silly argument at heart and it’s not going anywhere, because it would be completely impractical to make these adjustments even if the league cared to do so.



That’s not what I wrote. Try again.

That's exactly what you wrote. Paraphrased of course. People have to pay cost of living expenses, people have to pay taxes. Arguing one should be account for while the other isn't is being intellectually dishonest. BOTH impact a players bottom line which is what this entire bs narrative is trying to rest on. "Well taxation costs players to pick locations where they keep more of their money" while attempting to say that cost of living doesn't matter is illogical as both have a direct impact on the players bottom line.

 

[MadLuke]

That's exactly what you wrote. Paraphrased of course. People have to pay cost of living expenses, people have to pay taxes. Arguing one should be account for while the other isn't is being intellectually dishonest. BOTH impact a players bottom line which is what this entire bs narrative is trying to rest on. "Well taxation costs players to pick locations where they keep more of their money" while attempting to say that cost of living doesn't matter is illogical as both have a direct impact on the players bottom line.

The logic is

Tax remove your money, you see no reason for it.
Higher cost of living cost you money, but you look at the windows and walk around in California or Vancouver and see reason for it. When you look at Phil Danault signing with Los Angeles giving an interview (https://www.latimes.com/sports/hockey/story/2021-08-11/kings-phillip-danault-new-home), you do not imagine they have a hard time attracting nhl player because of the high housing price. It will not be 1:1, some place will be expensive not because they are particularly attractive to a young athlete family (say because Google employee make a fortune and zoning is restrictive), but the logic is sound.

 

[dekelikekocur]

The logic is

Tax remove your money, you see no reason for it.
Higher cost of living cost you money, but you look at the windows and walk around in California or Vancouver and see reason for it. When you look at Phil Danault signing with Los Angeles giving an interview (Phillip Danault has a new home with the Kings. Now he just needs a new residence), you do not imagine they have a hard time attracting nhl player because of the high housing price. It will not be 1:1, some place will be expensive not because they are particularly attractive to a young athlete family (say because Google employee make a fortune and zoning is restrictive), but the logic is sound.

That's not logic, it's trying to prop up an argument with bs. Taxes cost you money too. Just because it's taken before you get to see it doesn't mean it's not costing you. At the end of the year you aren't filing your net income for taxes, you're filing your gross income for your tax returns.

 

[tarheelhockey]

Anyone who pays taxes knows that state taxes are miniscule compared to federal so this is all just a bullshit discussion anyways.

And we are only talking about one kind of state tax.

I’m going to use a very rough sketch here, but putting this in perspective for our non-American (or non-taxpaying adult) forumers:

- Let’s say two players each make $5M in salary per year. One plays in San Jose, the other in Dallas.

- Roughly 50% of that is going to be taxed according to their local jurisdiction, because the other 50% of their work is done on the road. I am calculating the “other state” tax rate below as 8.9%, which is the average rate in the USA

- Let’s say the player owns a $1.5M home and annual sales tax eligible expenses of $500K.

- If they make no effort to reduce their tax burden, they will have the following obligations:

San Jose
Federal - 36.10% = $1,805,208
FICA - 2.51% = $125,632
State (CA) - 13.39% = $334,750
State (other) - 8.9% = $222,500
Property - $11,100
Sales - $44,250
Total - $2,543,440

Dallas
Federal - 36.10 = $1,805,208
FICA - 2.51% = $125,632
State (TX) - $0
State (other) - 8.9% = $222,500
Property - $27,150
Sales - $41,000
Total - $2,221,490

There is a difference of about 6% of the annual salary. Of course, this is all assuming that the player is financially incompetent and is paying sticker-price on their taxes. Anyone making $5M a year should have a financial advisor reducing these numbers to a minimum through write-offs and shelters, so we are not actually talking about a difference of anything near the $300K portrayed above. On a practical level, the final difference is likely in the $10Ks or low $100Ks.

Is that enough to make a multimillionaire choose to live in Dallas rather than Silicon Valley? Well, every year we see marquee players choosing to sign in NYC and Toronto and Los Angeles. So there’s your answer.

 

[Ligue]

Who prepared these tax analysis ?
Taxes are way more complicated than that. Yes players pay taxes in the city they play the game since their salary is split between games but at the end of the day they pay taxes based on official tax residency. So a foreign tax deduction would be applied to their net taxes payable at the end of the year. And to the people saying players are incorporated, no, absolutely not. They are employees. It wouldn't work in the current NHL system if they were incorporated.