Fix the income tax debate

[Ghost of Murph]

If the league balances things out based on income tax then it needs to balance out the unfairness of cities with good schools for players' kids, cities with better restaurants, cities closer to more outdoor activities, cities with better golf courses, cities with more cultural opportunities, cities best suited for families, cities that tax lower/higher to counterbalance state taxes or the lack there of, and of course cities with better climate and closer to beaches. Also need to make a formula so that better run teams don't gain too much advantage.

So many factors players use in deciding where to go. Need to balance it all out in response to Florida teams having a nice run in a very short window relative to league history, 2 of those Cups in odd seasons affected by COVID. Nevermind before the Panthers' run plenty of people wanted the team moved because the team sucked so bad. Where were the no state income tax is unfair zealots back then?

Shhhh... don't tell players about the Preds and Kraken. They'll all flock there and hoard Cups if they find out those teams are in places with no state income tax. Dallas needs to get on the ball as well. Since 1999 players forgot about the lack of state income tax in Texas.

It's all so unfair.

 

[Hockey Outsider]

Just apply the cap to post-tax income. Problem solved.

This topic again. To quote myself from an old thread:

After-tax income is much more difficult to quantify than many people think. A partial (but incomplete) list of factors that need to be taken into account:

• Marginal vs average tax rate - All NHL players would face the highest marginal tax rate on their remuneration, but their effective tax rate would always be lower due to the fact their income passes through the lower tax brackets first. So we couldn't calculate a general after-tax salary cap at the team level - it would have to be calculated separately for every player.
• Legal residency - It's possible for a player to live in Canada but be a resident, for tax purposes, of the US (or vice versa). Thus, a player might be employed by an American team, but would be a resident of Canada. Effectively, that player would be paying tax at the Canadian rate, despite playing for a US team.
• Signing bonus - The above point is further complicated by signing bonuses. There are specific provisions in the Canada/US tax treaty that effectively limit signing bonuses, paid by Canadian teams, to be taxed at that individual's US combined federal/state rate. So a Canadian team can pay a huge signing bonus to an American resident without any disadvantage from a tax perspective (Auston Matthews is a good example).
• Deductions - In general, US taxpayers can deduct agent fees, while Canadian players can't. Should this be taken into account? Why or why not? Similarly, Canadian residents can establish and RCA, which can provide significant tax benefits if used properly. Should that be taken into account? Who makes these decisions?
• Jock taxes - Several jurisdictions tax athletes on a pro-rated portion of their income based on when games are played - so you'd need to take the schedule into account, for every player, to get an accurate estimate of their after-tax income.

A comprehensive list of factors that need to be considered would be much longer. But even these points should indicate that calculating an after-tax salary cap would be a convoluted ordeal, and it would have to be constantly updated as facts change. The league would probably have to pay lawyers or accountants several hundred thousand dollars to do this.

From the owners' perspective, the value of this information isn't worth the cost - so taxes remain one of numerous inequalities between cities including cost of living, endorsement opportunities, climate, nightlife, etc.

 

[majormajor]

This topic again. To quote myself from an old thread:

After-tax income is much more difficult to quantify than many people think. A partial (but incomplete) list of factors that need to be taken into account:

• Marginal vs average tax rate - All NHL players would face the highest marginal tax rate on their remuneration, but their effective tax rate would always be lower due to the fact their income passes through the lower tax brackets first. So we couldn't calculate a general after-tax salary cap at the team level - it would have to be calculated separately for every player.
• Legal residency - It's possible for a player to live in Canada but be a resident, for tax purposes, of the US (or vice versa). Thus, a player might be employed by an American team, but would be a resident of Canada. Effectively, that player would be paying tax at the Canadian rate, despite playing for a US team.
• Signing bonus - The above point is further complicated by signing bonuses. There are specific provisions in the Canada/US tax treaty that effectively limit signing bonuses, paid by Canadian teams, to be taxed at that individual's US combined federal/state rate. So a Canadian team can pay a huge signing bonus to an American resident without any disadvantage from a tax perspective (Auston Matthews is a good example).
• Deductions - In general, US taxpayers can deduct agent fees, while Canadian players can't. Should this be taken into account? Why or why not? Similarly, Canadian residents can establish and RCA, which can provide significant tax benefits if used properly. Should that be taken into account? Who makes these decisions?
• Jock taxes - Several jurisdictions tax athletes on a pro-rated portion of their income based on when games are played - so you'd need to take the schedule into account, for every player, to get an accurate estimate of their after-tax income.

A comprehensive list of factors that need to be considered would be much longer. But even these points should indicate that calculating an after-tax salary cap would be a convoluted ordeal, and it would have to be constantly updated as facts change. The league would probably have to pay lawyers or accountants several hundred thousand dollars to do this.

From the owners' perspective, the value of this information isn't worth the cost - so taxes remain one of numerous inequalities between cities including cost of living, endorsement opportunities, climate, nightlife, etc.

You can still use a basic formula to estimate a players post tax income and get within 1 or 2% of the actual number.

And I don't see why the league wouldn't pay six-figures to someone to get even closer than that. A level playing field is worth it. Right now we are precisely unlevel. The table legs are off by a very clear amount. Better to have an almost-precise level.

 

[TheRumble]

This topic again. To quote myself from an old thread:

After-tax income is much more difficult to quantify than many people think. A partial (but incomplete) list of factors that need to be taken into account:

• Marginal vs average tax rate - All NHL players would face the highest marginal tax rate on their remuneration, but their effective tax rate would always be lower due to the fact their income passes through the lower tax brackets first. So we couldn't calculate a general after-tax salary cap at the team level - it would have to be calculated separately for every player.
• Legal residency - It's possible for a player to live in Canada but be a resident, for tax purposes, of the US (or vice versa). Thus, a player might be employed by an American team, but would be a resident of Canada. Effectively, that player would be paying tax at the Canadian rate, despite playing for a US team.
• Signing bonus - The above point is further complicated by signing bonuses. There are specific provisions in the Canada/US tax treaty that effectively limit signing bonuses, paid by Canadian teams, to be taxed at that individual's US combined federal/state rate. So a Canadian team can pay a huge signing bonus to an American resident without any disadvantage from a tax perspective (Auston Matthews is a good example).
• Deductions - In general, US taxpayers can deduct agent fees, while Canadian players can't. Should this be taken into account? Why or why not? Similarly, Canadian residents can establish and RCA, which can provide significant tax benefits if used properly. Should that be taken into account? Who makes these decisions?
• Jock taxes - Several jurisdictions tax athletes on a pro-rated portion of their income based on when games are played - so you'd need to take the schedule into account, for every player, to get an accurate estimate of their after-tax income.

A comprehensive list of factors that need to be considered would be much longer. But even these points should indicate that calculating an after-tax salary cap would be a convoluted ordeal, and it would have to be constantly updated as facts change. The league would probably have to pay lawyers or accountants several hundred thousand dollars to do this.

From the owners' perspective, the value of this information isn't worth the cost - so taxes remain one of numerous inequalities between cities including cost of living, endorsement opportunities, climate, nightlife, etc.

Serie A reports their salaries in terms of net income. If a player is offered 30,000 Euros a week, that's after taxes.

The NHL in terms of revenue is about the same size as the Premier League which is by far and away the largest soccer league in the world. The notion that they can't hire a bunch of dudes from Harvard and Yale with accounting degrees to figure this shit out is crazy to me. Does this league need to hold a Go Fund Me?

 

[DuklaNation]

This topic again. To quote myself from an old thread:

After-tax income is much more difficult to quantify than many people think. A partial (but incomplete) list of factors that need to be taken into account:

• Marginal vs average tax rate - All NHL players would face the highest marginal tax rate on their remuneration, but their effective tax rate would always be lower due to the fact their income passes through the lower tax brackets first. So we couldn't calculate a general after-tax salary cap at the team level - it would have to be calculated separately for every player.
• Legal residency - It's possible for a player to live in Canada but be a resident, for tax purposes, of the US (or vice versa). Thus, a player might be employed by an American team, but would be a resident of Canada. Effectively, that player would be paying tax at the Canadian rate, despite playing for a US team.
• Signing bonus - The above point is further complicated by signing bonuses. There are specific provisions in the Canada/US tax treaty that effectively limit signing bonuses, paid by Canadian teams, to be taxed at that individual's US combined federal/state rate. So a Canadian team can pay a huge signing bonus to an American resident without any disadvantage from a tax perspective (Auston Matthews is a good example).
• Deductions - In general, US taxpayers can deduct agent fees, while Canadian players can't. Should this be taken into account? Why or why not? Similarly, Canadian residents can establish and RCA, which can provide significant tax benefits if used properly. Should that be taken into account? Who makes these decisions?
• Jock taxes - Several jurisdictions tax athletes on a pro-rated portion of their income based on when games are played - so you'd need to take the schedule into account, for every player, to get an accurate estimate of their after-tax income.

A comprehensive list of factors that need to be considered would be much longer. But even these points should indicate that calculating an after-tax salary cap would be a convoluted ordeal, and it would have to be constantly updated as facts change. The league would probably have to pay lawyers or accountants several hundred thousand dollars to do this.

From the owners' perspective, the value of this information isn't worth the cost - so taxes remain one of numerous inequalities between cities including cost of living, endorsement opportunities, climate, nightlife, etc.

"Several hundred thousand dollars"? I used to charge out at $750/hr and that was many years ago. It will be significantly more but it is possible. We did multinational comps for businesses and that's way worse than a basic Can/US scenario.