Flaw in League salary cap structure

[StatsNightHero]

Does anybody else think the league's CBA is flawed by the differences in income tax in te league? If every team is limited to the same Salary Cap would it not make sense for the Cap to be adjusted in each market to account for the differences in income tax? Big markets such as Toronto are essentially paying for other teams players through revenue sharing and for those fans to get much cheaper tickets for a very similar experience. Players signing in Ontario lose a much larger percentage of their salary to tax (a factor that effects player contract demands) then those who sign in Florida (among others). I know this is a problem that extends beyond Toronto and includes other big markets but as a Leafs fan this is a legitimate piss off to me. Leafs fans pay more for tickets then those in Florida (and as you all know, it's not even close), and in return we get higher contract demands so the players can bring the same amount of money home after taxes. Another option (probably a legal mess) could be to subjugate all players in the league to the same income tax. The cap and revenue sharing is designed to put all the teams in the league on a level playing field and right now that is not the case. It's pure exploitation of this market and fan base considering we pay for other teams to get players for cheap.

Click to read more...

 

[hockeyes]

The real problem with the cap is signing a 4th line goon for 5.25x7. Tax's are a distant secondary thought.

 

[Ace88*]

Honestly, i was ready to come i. here and ridicule you and blast you, but you raise a valid point. Income tax in Canada for pro sports is a lot harsher than in the US. It goes state by state like we go province by province for taxes, but the regional disparity for tax rates in Canada is far more pronounced than in the US.

People here in Toronto bandy on and on about how free agents wont come here because we suck, but i suspect the much more restrictive tax rates here are a major deterrent to free agents than anything else. I love the leafs and bleed blue, but between the psychotic media and the silly taxes in ontario and alberta, should we really be in such shock that players would rather play in warmer climes both tax-wise and climate-wise?

 

[Durrr]

This will always be a problem because even IF this is recognized as unfair, why should the teams front the bill? A team can't be expected to pay a player more to balance the taxes in their location.

Only solution (and I'm not even sure if this fixes it) is to have pay be centralized in the state of the league headquarters or a state of their choosing. I know Canadian players get paid in USD$ though, so are you sure this is even an issue? Maybe they all get taxed the same already?

 

[-DeMo-]

I doubt players even know the actual difference in income after taxes. when has Tampa or Florida gone out and made a big splash in the UFA market? and they have like no taxes.

 

[Durrr]

I doubt players even know the actual difference in income after taxes. when has Tampa or Florida gone out and made a big splash in the UFA market? and they have like no taxes.

Ya (if this is true), I'm sure a player doesn't notice the extra 2 million taken from his 6 mil paycheck.

 

[akiberg8]

also a big deal is the strength of the Canadian dollar to the U.S. Canadian teams have to pay a lot more for salaries than the US for because of both income and foreign exchange

 

[Ace88*]

also a big deal is the strength of the Canadian dollar to the U.S. Canadian teams have to pay a lot more for salaries than the US for because of both income and foreign exchange

This also.

Im really curious to see like a chart of cdn stregnth and cdn market fa signings. i suspect there is a correlation.

 

[-DeMo-]

Ya (if this is true), I'm sure a player doesn't notice the extra 2 million taken from his 6 mil paycheck.

I'm talking about when NYR offers 6 mill and Toronto offers 6 mill and they have to decided, I bet majority of players don't know the difference.

 

[rdawg1234]

People here in Toronto bandy on and on about how free agents wont come here because we suck, but i suspect the much more restrictive tax rates here are a major deterrent to free agents than anything else. I love the leafs and bleed blue, but between the psychotic media and the silly taxes in ontario and alberta, should we really be in such shock that players would rather play in warmer climes both tax-wise and climate-wise?

That's simply a myth I've heard repeated way too many times.

We've had tonnes of interest from big name UFA's, middle UFA's, College UFAs(I think we've signed the most)

Not many players get to UFA worth signing really, but unless they have ties to another team already like a B. Richards did with Torts/NYR, we're usually on the players list.

However what's not a myth is that many players wont come here while we're bad, and really why would you if youre in your prime.

 

[PuckMagi]

also a big deal is the strength of the Canadian dollar to the U.S. Canadian teams have to pay a lot more for salaries than the US for because of both income and foreign exchange

i'm pretty sure everyone is paid in US dollars. though obviously they would convert a lot of it to Canadian dollars if they live here and espeically if they're also Canadian.

 

[Durrr]

I'm talking about when NYR offers 6 mill and Toronto offers 6 mill and they have to decided, I bet majority of players don't know the difference.

These are grown men lol, most of whom I'm sure have personal accountants. If I'm a broke 20 year old and fully know and understand the taxation differences in Canada and the States, why wouldn't a millionaire making a career decision?

 

[PuckMagi]

it's also hard to know how much extra the players make from endorsements. so maybe people come to Toronto because what they lose in income tax, they can make up for with endorsements. or maybe they get a cut when someone buys their jersey or something like that.

kadri must have all that falafel money rolling in.

but i agree, the salary cap should be calculated in after tax dollars (income tax). we also have more expensive housing and we have sales taxes and probably a bunch of other taxes that are higher... but adjusting for income tax seems fair.

what if Quebec decides to "tax the rich" and raises taxes to 90% for people making more than 1 million dollars. obviously if something crazy like that happened, no one would want to play for Montreal... but just because we don't have an extreme case like that, doesn't mean it's not still a factor.

 

[Durrr]

it's also hard to know how much extra the players make from endorsements. so maybe people come to Toronto because what they lose in income tax, they can make up for with endorsements. or maybe they get a cut when someone buys their jersey or something like that.

kadri must have all that falafel money rolling in.

but i agree, the salary cap should be calculated in after tax dollars (income tax). we also have more expensive housing and we have sales taxes and probably a bunch of other taxes that are higher... but adjusting for income tax seems fair.

what if Quebec decides to "tax the rich" and raises taxes to 90% for people making more than 1 million dollars. obviously if something crazy like that happened, no one would want to play for Montreal... but just because we don't have an extreme case like that, doesn't mean it's not still a factor.

Well if this happened Quebec could say goodbye to all of it's industry, not just hockey players. Anyways, are we positive that players don't all get taxed equally? They all get paid in USD, doesn't this possible mean they all get paid in the same state?

 

[Ace88*]

i'm pretty sure everyone is paid in US dollars. though obviously they would convert a lot of it to Canadian dollars if they live here and espeically if they're also Canadian.

They are, but unless you have an international bank account (most dont) then it's getting converted before deposit.

 

[Ace88*]

Well if this happened Quebec could say goodbye to all of it's industry, not just hockey players. Anyways, are we positive that players don't all get taxed equally? They all get paid in USD, doesn't this possible mean they all get paid in the same state?

Unfortunately it depends on citizenship. If a player plays in canada, they are subject to canadian taxes. But if a Canadian player has a US citizenship as well and plays in Canada OR the US, they have to pay taxes to both countries. American tax law is ****ed up man, they are ruthless as hell.

 

[pucci2001]

I doubt players even know the actual difference in income after taxes. when has Tampa or Florida gone out and made a big splash in the UFA market? and they have like no taxes.

And with their salary they probably can't afford to higher an accountant or financial advisor that can maximize their income. They just get their paycheck the same as everyone else and ***** about taxes and do nothing....

 

[colchar]

Another option (probably a legal mess) could be to subjugate all players in the league to the same income tax. The cap and revenue sharing is designed to put all the teams in the league on a level playing field and right now that is not the case. It's pure exploitation of this market and fan base considering we pay for other teams to get players for cheap.

First, you don't appear to know what 'subjugate' means. Second, the league doesn't dictate income tax - governments do. How would your little idea work if the government (at whichever level) were to raise income taxes during a season?

 

[ACC1224]

Don't you pay Tax based on your primary residence?
I've worked for and billed Clients in different Provinces/States but always pay Tax based on Canada/Ontario Rates

 

[akiberg8]

Don't you pay Tax based on your primary residence?
I've worked for and billed Clients in different Provinces/States but always pay Tax based on Canada/Ontario Rates

Tax is based on residency in almost every country but not in the U.S., where it's based on Citizenship. In Canada, a person is deemed a resident if they are within the country for more than 183 days ever year.

A U.S. Citizen who is resident in Canada would not have to pay double tax, I.E. an American player playing for a Canadian team. Tax treaties between the U.S. and Canada have been established, probably with rules specific to athletes, which I'm unsure of. Therefore, a player like Kessel or Van Riemsdyk will pay tax to the Canadian government for their hockey income, and to the U.S. government for any income earned inside the U.S.A.

Source: accounting student

 

[ACC1224]

Tax is based on residency in every country except the U.S. and Phillipines, where it's based on Citizenship. In Canada, a person is deemed a resident if they are within the country for more than 183 days ever year.

Therefore, I'm pretty sure a U.S. Citizen who is resident in Canada would have to pay double tax, I.E. an American player playing for a Canadian team. Tax treaties between the U.S. and Canada have been established, probably with rules specific to athletes, which I'm unsure of. Therefore, a player like Kessel or Van Riemsdyk will pay tax to both the Canadian government and a smaller amount to the U.S. government.

Source: accounting student

Interesting.

I wonder if Players reach 183 days?

 

[akiberg8]

Interesting.

I wonder if Players reach 183 days?

Ya, just thinking about it, they probably don't. Now I'm confused. There are probably specific tax rules that apply solely to athletes.

 

[ACC1224]

Ya, just thinking about it, they probably don't. Now I'm confused. There are probably specific tax rules that apply solely to athletes.

Ask your Teacher and get back to us.

 

[ULF_55]

Okay, how many here have not filed an income tax return?

The rich players could buy a full time accountant to deal with investments and taxes while the minor leaguers would do regular taxes like the rest of us slugs.

However many companies have cost of living adjustments for different locations. That could be an option to equalize across the league. That's up to the PA in negotiations.

 

[Cams]

I don't the exact specifics of it, but I can say this re: income tax.

I work with someone whose nephew plays for Colorado, and owns a residence in Windsor, and splits his time off season at a house he owns in Denver and Windsor, and is a Cdn citizen. He has to play income tax in every state/province that he plays in.