An idea to remove the cap advantage for no tax states

[BLNY]

I think this topic comes up at least once a month. The easiest solution is to simply make the salary cap a post-tax cap. Just remove it from the equation. It doesn't matter what you pay player X before tax.

 

[ohcomeonref]

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.

Fair enough

 

[tucker3434]

I think this topic comes up at least once a month. The easiest solution is to simply make the salary cap a post-tax cap. Just remove it from the equation. It doesn't matter what you pay player X before tax.

So we’ll figure out the salary cap for a season about 18 months after handing out the cup? Can’t see any problems with that.

 

[Beukeboom Fan]

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.

While I agree with your general statement (can't effectively equalize cap for a "perfectly balance" the cap with regard to competitive balance) - I do have a couple of questions:
1) Why would sales or property tax differentials make the theoretical calculation I did not materially correct? Those factors would be included in the cost of living which varies significantly between regions. My analysis was strictly around the impact of state/provincial income taxes. I didn't try to factor in everything because you can't monetize much of the potential differences.
2) If a player is doing a charitable donation - that is a "net cash outflow". The tax impact reduces the "net amount", but the player is not avoiding tax by paying more to a charity than they get the benefit of from a tax perspective.
3) Does the signing bonus impact anyone except Austin Matthews? Most agents want the signing bonus for the time value of money and to make the contract "buy-out proof", which are certainly benefits. AM gets the added benefit of the tax treatment - but I that seems to be an exception rather than the rule.

You seem to be adding a bunch of variables that just muddy the waters. But in general - I think we agree - there are a bunch of factors why players sign where they do, and it seems like the media (or certain posters on this site) ignore everything except the state income tax. I would say it's interesting from the media perspective because I don't ever remember hearing about some of the crazy fishbowl affect in Canadian markets from the main-stream media.

 

[Figgy44]

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

That doesn't work in a broad brush manner.

Dual citizenship (or not), marital status (tax credits or deductibility of support payments), dependents (children and/or other), where you reside regularly/off season, sojourner rule (ie: perhaps affected by where you recuperate while on LTIR/vacation etc.), additional income, deductions you have on your tax return (ie: self represent vs hire agent), salary vs bonus ratio, residency ties, donations etc. are things, but not exhaustive things that affect the qualitative calculations of tax return.

Again, personal tax returns do not work that way. Those saying "do it post tax" don't understand that different circumstances can mean significant different taxation. It also can mean you can change the behaviors of certain individuals to change certain facets and calculations of the year to year taxation. That's significant differences between a same player year in year out, let alone different people in different locations.

You might as well hand out identical cars to 100 players on the team and demand the vehicles have identical odometer readings, repair expenses and cost of ownership at every point after 365 days. The ones that don't do anything, yeah perhaps it's close. The ones that actually use the vehicles, it'll fluctuate year to year, let alone player to player.


Then you have stuff like the Tavares situation for the residency thing. How does that affect the calculation if you locked in the "net after tax" for that year? This is a CRA Tavares vs Taveres personal interpretation situation. If you potentially have moving targets on each individual player, that's confusing in its own right. It's not even a Tavares vs Marner vs Matthews type of discrepancy yet let alone even more complexity an attempt to understand the Taveres vs Panarin type of discrepancy for tax purposes.


Proposing any type of equalization based on some facet of taxation is not going to work.

 

[T REX]

A lot of talk lately about certain teams without income tax having an unfair advantage with the salary cap as they're able to sign players at a discount. Not much talk about how to fix it but I have one fairly simple idea (in theory). Fans of these teams won't like it but how about no tax teams don't get the cap increase that is going to be taking place over the next few seasons? It's expected to go past $100 million in 3 seasons or so, well how about no tax teams stay at $88 million or at least have a reduced cap increase compared to every other team.

Eventually the league settles on a certain percentage, whether it's 15-25% less than other teams - at least this advantage will be taken away from them. It might be complicated to have two different salary caps but perhaps its worth a try. Thoughts?

NHLPA will never ever agree to this

ever.

 

[VivaLasVegas]

A lot of talk lately

But any such talk by the owners or NHLPA reps?

What might be a hot topic among the many talking heads of hockey may not be a topic at all to the owners and players who have displayed an enormous talent for giving nothing more than meaningless lip service to the deepest desires of the talking heads (and, frankly, NHL fans in general).

 

[I Hate Blake Coleman]

What in the everloving blue f*** idea is this garbage? If a troll, a good one.

It's the sort of response that's deserved for all the fans bellyaching about taxes.

 

[BLNY]

So we’ll figure out the salary cap for a season about 18 months after handing out the cup? Can’t see any problems with that.

So base it off the previous tax year. It's still more equitable and it's simple.

 

[Golden_Jet]

A lot of talk lately about certain teams without income tax having an unfair advantage with the salary cap as they're able to sign players at a discount. Not much talk about how to fix it but I have one fairly simple idea (in theory). Fans of these teams won't like it but how about no tax teams don't get the cap increase that is going to be taking place over the next few seasons? It's expected to go past $100 million in 3 seasons or so, well how about no tax teams stay at $88 million or at least have a reduced cap increase compared to every other team.

Eventually the league settles on a certain percentage, whether it's 15-25% less than other teams - at least this advantage will be taken away from them. It might be complicated to have two different salary caps but perhaps its worth a try. Thoughts?

How does that help, when players pay taxes for how many games they play in each state/province.
So they are paying taxes in probably about 20 different jurisdictions.

 

[tomin]

get rid of income tax across the globe. We all win then. Why only fight for nhl players!? They are people too.

 

[jackjohnson]

As I’ve said many times before, a soft cap would accomplish what you guys are trying to do by “fixing” taxes but much more easily(/cheaply). Owners don’t want it. It’s all just a solution with no problem.

Luxury tax woyld be more fair than hard cap. Have a soft cap then tax teams that go over the cap. So if its 1 mil, tge team has to pay 500,000 to revenue sharing and if they go over by 5 million, they pay 2.5 mil to the league. If they go over by 10 million, need to pay 5 million luxury tax. 20 million would ve a 10 million tax to league and so on and so forth. This would ensure rich teams pay more to league revenue sharing and that would help poor teams. So if a team is spending at cap floor, they would be eligible for financial assitance that allows them to sign players.

get rid of income tax across the globe. We all win then. Why only fight for nhl players!? They are people too.

Impossible

 

[tomin]

Luxury tax woyld be more fair than hard cap. Have a soft cap then tax teams that go over the cap. So if its 1 mil, tge team has to pay 500,000 to revenue sharing and if they go over by 5 million, they pay 2.5 mil to the league. If they go over by 10 million, need to pay 5 million luxury tax. 20 million would ve a 10 million tax to league and so on and so forth. This would ensure rich teams pay more to league revenue sharing and that would help poor teams. So if a team is spending at cap floor, they would be eligible for financial assitance that allows them to sign players.


Impossible

possible, absolutely. Maybe you think income tax is too low? I’m just reaching but wouldn’t you welcome no income tax? Some posters here seem to suggest that NHL players do.

 

[tucker3434]

So base it off the previous tax year. It's still more equitable and it's simple.

There’s literally nothing simple about taxation, especially for the rich.

 

[danny90]

I thought this whole tax thing was debunked

 

[jackjohnson]

possible, absolutely. Maybe you think income tax is too low? I’m just reaching but wouldn’t you welcome no income tax? Some posters here seem to suggest that NHL players do.

No income tax is impossible in canada since we have universal health care, welfare etc. Maybe it works for some US states that also dont give out much benefits like florida but not Canadian cities that require taxing income in order to pay for essential services.

Also forgot to mention that Canadian government also subsidizes medication as it negotiates with pharmacy companies for lower prices, subsidizes generic meds and covers medication for low income people. So some meds are free for people that are low income or have no income. I dont see these benefits in US unless a person has private insurance

 

[Golden_Jet]

Luxury tax woyld be more fair than hard cap. Have a soft cap then tax teams that go over the cap. So if its 1 mil, tge team has to pay 500,000 to revenue sharing and if they go over by 5 million, they pay 2.5 mil to the league. If they go over by 10 million, need to pay 5 million luxury tax. 20 million would ve a 10 million tax to league and so on and so forth. This would ensure rich teams pay more to league revenue sharing and that would help poor teams. So if a team is spending at cap floor, they would be eligible for financial assitance that allows them to sign players.


Impossible

Doesn’t work.
If a team goes over by 10 million, then they need to pay an additional $10 million to owners, so the amount becomes escrow neutral. Otherwise players just have to pay back the whole overage.

 

[tomin]

No income tax is impossible in canada since we have universal health care, welfare etc. Maybe it works for some US states that also dont give out much benefits like florida but not Canadian cities that require taxing income in order to pay for essential services.

so it is possible. You just prefer income tax. I understand now. In a world where you don’t pay income tax, could you pay yourself for your healthcare? I’m assuming you’re working so welfare wouldn’t apply to you at this time.

 

[jackjohnson]

Doesn’t work.
If a team goes over by 10 million, then they need to pay an additional $10 million to owners, so the amount becomes escrow neutral. Otherwise players just have to pay back the whole overage.

Well am just giving an example. Am sure the amount could be adjusted. The idea would allow poor teams to survive while rich teams the ability to sign and keep star players while being controlled on how much they spend.

 

[Leafs87]

Reduce the total cap allowance and make it based on take home pay.

 

[Golden_Jet]

so it is possible. You just prefer income tax. I understand now. In a world where you don’t pay income tax, could you pay yourself for your healthcare? I’m assuming you’re working so welfare wouldn’t apply to you at this time.

There are only a few third world countries without universal health care, plus the states.

 

[triggrman]

No income tax is impossible in canada since we have universal health care, welfare etc. Maybe it works for some US states that also dont give out much benefits like florida but not Canadian cities that require taxing income in order to pay for essential services.

Also forgot to mention that Canadian government also subsidizes medication as it negotiates with pharmacy companies for lower prices, subsidizes generic meds and covers medication for low income people. So some meds are free for people that are low income or have no income. I dont see these benefits in US unless a person has private insurance

Let me clarify. Everyone has a federal income tax in the US, it's just some states use state income taxes for local taxes, some states use high sales taxes.

 

[jackjohnson]

Let me clarify. Everyone has a federal income tax in the US, it's just some states use state income taxes for local taxes, some states use high sales taxes.

Well in provinces like BC and Ontario which have provincial taxes, they wpnt get rid of them. In fact BC is notorious for looking at ways to increase taxes including increase in property tax, carbon tax which is gas tax etc.

 

[triggrman]

Well in provinces like BC and Ontario which have provincial taxes, they wpnt get rid of them. In fact BC is notorious for looking at ways to increase taxes including increase in property tax, carbon tax which is gas tax etc.

Right, we have things like that here too.

Which makes this even more of a waste of time. Do we need to breakdown the entire cost of living in each city to determine fairness, or we just going to go with "states with no income tax have an advantage" again forgetting that you pay taxes on where you earn the money so it's only an advantage for the home games.

 

[jackjohnson]

Right, we have things like that here too.

Which makes this even more of a waste of time. Do we need to breakdown the entire cost of living in each city to determine fairness, or we just going to go with "states with no income tax have an advantage" again forgetting that you pay taxes on where you earn the money so it's only an advantage for the home games.

Thats why a soft cap would work the best. Since it will be fair for all teams. A hard cap gives zero flexibility imo and it isnt ideal for 2 countries that have big difference in currency exchange and income tax.