An idea to remove the cap advantage for no tax states

[TheFinalWord]

There are advantages and disadvantages to all teams. How do you fairly account for cost of living in New York City vs Winnipeg? Or Vancouver vs Salt Lake City? How do you fairly account for weather? Florida is much nicer in the winter than Winnipeg. There are more to taxes than just state/provincial taxes as well. Nobody was worried about Florida until recently, but that's because both teams are very good, which makes it easy to draw in players. It isn't just one thing (taxes) and so there will never be an equitable way to account for everything. If you win, you tend to be able to sign free agents. When Edmonton sucked, they couldn't sign anyone. Now they can. Winning is a bigger draw than taxes IMO.

 

[Profet]

Gary Bettman invented state taxes in 2018

I knew I hated him.

 

[pantherbot]

Auston Matthews Shoots and Scores Tax Savings | Crowe Soberman LLP

On February 5, Auston Matthews signed a 5-year contract extension with the Leafs for $58.15M. Fans have reason to be thrilled today, but Canadian taxpayers may be a bit irritated.

www.crowe.com

Taxes are avoidable. People with high incomes have even greater means to avoid taxes.

There is no problem.

tl;dr stfu with your facts

 

[Profet]

Which is the reason why no team in the Pacific time zone has ever won the cup in the entire 9 year history of the NHL.

Wait... what?

Haven't 2 Pacific time zone teams won the cup in the last 10 years? Vegas/LA?

Or am I missing the joke about "9 year history?"

I'm so confused.

 

[TLEH]

I mean there is 100% an advantage. Not sure there is a real way to fix it directly. You'd have to attack the cap in a different way.

 

[filinski77]

Should we also apply cap adjustments to teams who are in markets where more endorsement deals are available? What about adjustments for cost of living? Should we update cap for changes in the currency exchange rate?

The answer is no. Florida was a loser franchise for years, and players had no interest in sacrificing money to go there. Canadian fans complained about the fact that there is a franchise in Florida for two decades. Now that Florida is winning, they want to reduce their ability to compete. Winning is driving Florida’s contracts down, not tax dollars.

Agreed lol. Add to the list that we'd need to eliminate signing bonuses, which hurt rich teams like the Leafs.

Signing bonuses give huge advantages due to:
1) Different tax treatment, as it's based on where the player is a resident of. This allows opportunities for Canadian players to be taxed in a US city.
2) Time value of money, if you get a whole lot of signing bonuses front-loaded early in the contract, you could actually make 15-30+% more money in the long run, if you chose to invest it.

 

[JPT]

There's nothing I love more than a libertarian taxation discussion on a hockey forum

 

[Beukeboom Fan]

What is the actual math on the difference in take home pay for avg salary ($3.5M)? I’ve seen calculations before that are just wrong (don’t account for tax law, road games, etc).

Because back of the napkin in my head… this is one of the most overblown issues there is, especially in a league that’s highest paid players are making peanuts compared to other sports leagues that have no problem with it.

CLC - there is a ridiculous amount of detail for the specifics, but IMO the bolded is the most important aspect. All players are taxed based on what they earn for playing the game in their local taxing authority. So when FLA plays a road game in NYC - they pay NYC tax on what they earn for that game. Teams in "no income tax states" receive an advantage because a higher % of their games are played in the "no state tax" situation, so they get more of a benefit of that. It gets more complicated by city income taxes in some juridictions, and the difference between US & CAN federal tax rates as well.

I would say that there is a ton of "nuance", and that there isn't a simple answer to the real difference without having access to players actual returns. With that said - if you do a simple theoretical recalculation assuming a 8% average state income tax rate (which seems high - but estimated high to maximize the impact) and FLA team playing 43 games (41 home games + 2 road games vs. TB/FLA) in tax free state vs. 4 for a NY team (2 road games vs. TB/FLA) it comes out a ~3% difference, which would equate to $100K for an average player salary ($3.5M). Lots of estimates included there, but it should be "materially" correct for overall analysis purposes.

 

[63 others]

then you ahould also get rid of endorsement deals. every time a big ufa is to sign, canadian fans tell us that the player can make more money in the big markets.

unfair for teams like tampa and florida

 

[Beukeboom Fan]

Beukeboom, I should have not said 'nothing'. In reference to tax, there are ways to significantly mitigate what you pay, and I am sure that you know this.

Pete - for some very high net worth people - there is a theory of tax deferral (paying in the future instead of now), but I am not aware of any consistent ways to NOT pay tax over the long term that doesn't end you up in jail (see DMX, Nic Cage, or Wesley Snipes for details). Some players might be able to "play games" with regard to their home state (aka - Austin Matthews for signing bonus being paid while he's a resident of AZ), but for the most part - players (just like every other individual) are going to be paying a lot of tax based on their earnings. The idea of "tax dodges" for normal individuals is pretty much an urban myth.

View attachment 893281

From a personal income tax perspective - let me know how that works again?

 

[Beukeboom Fan]

I’m just playing devil’s advocate. It is my opinion that the owners (all of them) love having a hard cap on their largest expense line item. They want their managers to figure out how to make it work in a system that rewards them with record profits year after year. This is, after all, a business.

But… if they did wake up one morning and decide they hate money, you wouldn’t have to light it on fire in the most difficult way possible.

100% agree. The small market owners need the hard cap to not lose their ass, and for the large market owners it makes the organization a HUGE cash cow at the expense of pissing off their fans that they can't use their market advantage competitively.

 

[Profet]

Pete - you are 100% incorrect. I'm a CPA, and there isn't a tax accountant on the planet that can get you out paying income taxes.

Agreed...
Tax evasion is illegal, but tax avoidance is encouraged.

That said, avoidance strategies can be very effective. Signing bonuses, investments for long term cap gains rates, setting up businesses to handle sponsorships/endorsement deals, etc.

 

[Figgy44]

A lot of people don't understand the basics of tax systems. It's not easy to just declare you want to harmonize the taxation. Qualitative factors can affect the quantitative calculation for taxation. This isn't an NHL issue. Any organization that spans multiple internal and international tax jurisdictions like the NHL does will have seen this. People who prepare tax returns too.

Two dudes, aged 28 born in Ontario with an AAV of $4.5 million on the same team may pay different taxes than each other.

Two dudes, aged 28 born in New York with an AAV of $4.5 million on the same team may pay different taxes than each other.

Two dudes, aged 28 born outside of North America with an AAV of $4.5 million on the same team may pay different taxes than each other.

And that's just personal situation on the same team. The differences between teams haven't even started yet.

 

[ohcomeonref]

With how quickly this thread filled up with people moaning and complaining I'm inclined to think this is a bigger problem than I thought it was.

 

[Sgt Schultz]

With how quickly this thread filled up with people moaning and complaining I'm inclined to think this is a bigger problem than I thought it was.

The board could announce that we are all equal partners in some wildy enormous lottery winnings that would pay out $100,000 to every member, and checks will be mailed out tomorrow. If it did, people would be moaning and complaining that the checks have not gone out today, and that they are entitled to some larger percentage than everybody else.

 

[Wats]

Might as well ban good weather or no effort fanbase following/ticket sales. Every city comes with advantages and disadvantages. Part of sports.

 

[x Tame Impala]

Let's just get rid of all the Canadian teams. Move them down to the states and have the Stanley Cup played in a different Canadian city every year

 

[NOTENOUGHRYJOTHINGS]

A lot of people don't understand the basics of tax systems. It's not easy to just declare you want to harmonize the taxation. Qualitative factors can affect the quantitative calculation for taxation. This isn't an NHL issue. Any organization that spans multiple internal and international tax jurisdictions like the NHL does will have seen this. People who prepare tax returns too.

Two dudes, aged 28 born in Ontario with an AAV of $4.5 million on the same team may pay different taxes than each other.

Two dudes, aged 28 born in New York with an AAV of $4.5 million on the same team may pay different taxes than each other.

Two dudes, aged 28 born outside of North America with an AAV of $4.5 million on the same team may pay different taxes than each other.

And that's just personal situation on the same team. The differences between teams haven't even started yet.

Get TEQs built into the next CBA. Have all NHL salaries be after tax. The owners would love paying extra!

 

[x Tame Impala]

The board could announce that we are all equal partners in some wildy enormous lottery winnings that would pay out $100,000 to every member, and checks will be mailed out tomorrow. If it did, people would be moaning and complaining that the checks have not gone out today, and that they are entitled to some larger percentage than everybody else.

My post-to-like ratio is higher than most I should get more money!

 

[Viqsi]

My post-to-like ratio is higher than most I should get more money!

I was going to like this post but realized it might jeopardize my own desire for a bigger share of the pie.

 

[bossram]

CLC - there is a ridiculous amount of detail for the specifics, but IMO the bolded is the most important aspect. All players are taxed based on what they earn for playing the game in their local taxing authority. So when FLA plays a road game in NYC - they pay NYC tax on what they earn for that game. Teams in "no income tax states" receive an advantage because a higher % of their games are played in the "no state tax" situation, so they get more of a benefit of that. It gets more complicated by city income taxes in some juridictions, and the difference between US & CAN federal tax rates as well.

I would say that there is a ton of "nuance", and that there isn't a simple answer to the real difference without having access to players actual returns. With that said - if you do a simple theoretical recalculation assuming a 8% average state income tax rate (which seems high - but estimated high to maximize the impact) and FLA team playing 43 games (41 home games + 2 road games vs. TB/FLA) in tax free state vs. 4 for a NY team (2 road games vs. TB/FLA) it comes out a ~3% difference, which would equate to $100K for an average player salary ($3.5M). Lots of estimates included there, but it should be "materially" correct for overall analysis purposes.

Nope, it's not "materially correct", even from a financial perspective. There are sales tax differentials between states, property tax differentials (players gotta live somewhere!), and typically the no income-tax states have higher sales/property taxes to make up that revenue.

Now let's look at individuals' specific tax situations: Are they getting signing bonuses? Is their place of residence somewhere else, subjecting the SB to a different tax rate? Are they donating to reduce their tax liability? Are they shifting income to various tax-advantaged accounts?

And that's not even getting into all the non-financial factors a player would weight when choosing a team. Like team fit, culture, winning, weather, proximity to home/family.

There is no realistic way to "equalize" all these things. And to pretend to think you can belies belief.

 

[Frank Drebin]

While we're spitballing, what about the idea of having an amnesty buyout per team, say one allowed every three seasons? Its not good for the game to have a franchise suffer for mistakes made by a twice removed GM.

 

[Profet]

My post-to-like ratio is higher than most I should get more money!

No... it isn't.

Also... I've been around longer. That has to count for something.

 

[Idiot Stick]

While we're spitballing, what about the idea of having an amnesty buyout per team, say one allowed every three seasons? Its not good for the game to have a franchise suffer for mistakes made by a twice removed GM.

triple the tax on nurse

 

[ijuka]

Just pass laws at the state/provincial level that says athletes are exempt from state income taxes.

poor athletes and their million-dollar incomes, make those poor souls spend hundreds of thousands less on taxes and instead take that money from the people making 100 times less money, great idea!

No... it isn't.

Also... I've been around longer. That has to count for something.

Likes weren't even around for a long time so if you have many posts from before they were implemented looking at the ratio is misleading.