Let’s even the playing field…after tax payroll cap

[triggrman]

The only thing the NHL can do to minimize the tax advantage between the teams in U.S. states with no state income taxes and the teams in states/provinces with state/provincial income taxes is to prohibit signing bonuses. It's the signing bonuses which can make a difference for a player in the end.

Steven Stamkos' contract is a prime example of it:
2016-17: $8.5m (SB) + $1m (salary)
2017-18: $8.5m (SB) + $1m (salary)
2018-19: $8.5m (SB) + $1m (salary)
2019-20: $8.5m (SB) + $1m (salary)
2020-21: $8.5m (SB) + $1m (salary)
2021-22: $6.5m (SB) + $1m (salary)
2022-23: $5.5m (SB) + $1m (salary)
2023-24: $5.5m (SB) + $1m (salary)
Totals: $60m (SB) + $8m (salary)

Signing bonuses are usually paid during the off-season and taxed in the state/province the player are resident in. It's the salary, which are paid out 13 times during the regular season, are taxed in the state/province the player (and the team) are when the salary is paid out.

If the NHL had prohibited signing bonuses then Stamkos would not been so eager to give any major discount to Tampa because much more of his salary would be taxed. He would then demand another $1-3 million to the annual salary on his current contract. That would lead to that Tampa could not have the roster they've now and probably not been able to achieve a potential three-peat because the other star players would also demand higher salaries which mean less competent support players on the roster.

Wouldn’t this really hurt Toronto on Mathew’s contract ?

 

[Machinehead]

I can't believe people want less flexibility with the cap.

You're already in trouble if you have three good players as it is.

 

[Xanlet]

Players are paid in USD, so factor that in too as a pro for players playing in Canadian markets.

Someone making 1mil walks away with 1.28 CAD.

Tax loopholes, charity etc. Thered ways to minimize the discrepancy.

Also, I believe when Tampa plays in OTT, MTL, TOR, they get taxed by the canadian tax code.

There is a slight difference but not as big as people make it out to be. I think weather and media and quality of life play more of a role. The States are just a better place to live if you're rich.

If anything, taxes are WAY bigger of a deal than most fans think. Consider that when Radulov was deciding whether to sign in Dallas or Montreal, On $31.25m over 5 years, the difference in taxes from just playing in Texas would be $4.4m. That's right, on the exact same salary, over 5 years, the difference in taxes would be $4.4m, almost an entire Mill PER YEAR for one single player. Now apply that to every player on a team and Dallas basically gets over $12m extra cap space to spend on players. It's just insane to expect Canadian teams to compete with that big of a cap handicap every year.

 

[Pizza!Pizza!]

View attachment 561986

If anything, taxes are WAY bigger of a deal than most fans think. Consider that when Radulov was deciding whether to sign in Dallas or Montreal, On $31.25m over 5 years, the difference in taxes from just playing in Texas would be $4.4m. That's right, on the exact same salary, over 5 years, the difference in taxes would be $4.4m, almost an entire Mill PER YEAR for one single player. Now apply that to every player on a team and Dallas basically gets over $12m extra cap space to spend on players. It's just insane to expect Canadian teams to compete with that big of a cap handicap every year.

Correct. Burkie talks about this as well and said he usually had to pay guys at least an extra 500k/yr over the fair market value as a sort of 'Canada tax'.

 

[HFpapi]

I'm sure this has been discussed many times in various places at various time, but in light of Matthew Tkachuk's reported "wish list" being all tax-free states (aside from his home in St. Louis), it makes me think.

Seems like a clear disparity that can easily be remedied. Players aren't dumb, or at least their agents aren't. They know what the take home will be in various places so there's no advantage to a team being able to offer more money than another if they work out to the same take-home pay.

Conversely, there's an obvious disadvantage to having to offer a player more than another team just for the take home pay to work out the same when all teams operate under the same cap limit.

The cap was brought in to level the playing field, so let's make sure the playing field is level.

Is there an obvious impediment to this that I am missing?

 

[WhereAreTheCookies]

Should the cap also be adjusted based on a players ability to make money from other sources in each market too?

I'm sure a player in NY or Toronto can make far more from endorsement deals than they can in a place like Buffalo or Carolina.

 

[kerrabria]

How are we adjusting the cap for other quality-of-life factors?
If we're adjusting for taxes, surely we're adjusting for real estate prices as well.

 

[HFpapi]

Should the cap also be adjusted based on a players ability to make money from other sources in each market too?

I'm sure a player in NY or Toronto can make far more from endorsement deals than they can in a place like Buffalo or Carolina.

That's not nearly as cut and dry as tax rate though, that would be pure speculation. Is Pittsburgh a huge market? Did it stop Crosby from getting endorsements?

Also, just because you can't fix every problem doesn't mean you shouldn't bother fixing the ones you can.

How are we adjusting the cap for other quality-of-life factors?
If we're adjusting for taxes, surely we're adjusting for real estate prices as well.

Yes cost of living can also be brought into the mix, I don't think that's a stupid suggestion even though it's meant to be sarcastic.

Have some economists sit down and calculate based on cost of living and tax rate to adjust teams cap limit a few percentages up or down based on those factors. Tampa's might be 79 million and NY 84 million and yet purchasing power would be the same

 

[The Macho King]

Can we just have a stickied thread for this topic by now where fans of teams with shitty management can blame other factors behind their team sucking?

 

[HFpapi]

Can we just have a stickied thread for this topic by now where fans of teams with shitty management can blame other factors behind their team sucking?

What does Matthew Tkachuk insisting he will only sign in a tax-free state have to do with the management of other teams?

 

[kerrabria]

That's not nearly as cut and dry as tax rate though, that would be pure speculation. Is Pittsburgh a huge market? Did it stop Crosby from getting endorsements?

Also, just because you can't fix every problem doesn't mean you shouldn't bother fixing the ones you can.


Yes cost of living can also be brought into the mix, I don't think that's a stupid suggestion even though it's meant to be sarcastic.

Have some economists sit down and calculate based on cost of living and tax rate to adjust teams cap limit a few percentages up or down based on those factors. Tampa's might be 79 million and NY 84 million and yet purchasing power would be the same

At that point why even bother having a salary cap? I mean, you're going to make it that convoluted, individualized, and, quite frankly, arbitrary (because there will always be an arbitrary line to draw on what gets included and how much you weight each factor).

May as well just have a luxury tax. Would be way more straight forward.

 

[Voight]

Florida could have taxes as high as California and players would still sign there. Why? Well, Tampa is the cream of the crop right now, Panthers have a solid core oh and its Florida; people want to live there.

 

[HFpapi]

At that point why even bother having a salary cap? I mean, you're going to make it that convoluted, individualized, and, quite frankly, arbitrary (because there will always be an arbitrary line to draw on what gets included and how much you weight each factor).

May as well just have a luxury tax.

I'm perfectly in favour of getting rid of the salary cap. Have a luxury tax like the NBA. I hate the salary cap and not even because I'm a Leafs fan, we sucked before the cap too. I hated watching well built teams like the Blackhawks getting dismantled because of the cap.

But if we are going to have a cap for "parity," seems natural to at least have it be fair no?

 

[Golden_Jet]

What does Matthew Tkachuk insisting he will only sign in a tax-free state have to do with the management of other teams?

No, we don’t need a new system. Or is complicated to fix.
Yes this has been covered numerous times.

Take Auston Matthews , he gets a lot more take home than Marner, because he has US residency, and has huge signing bonuses.
He pays less than half the tax on the signing bonus Marner does.
Also players can invest in RCA to lower taxes.

Basically it’s complicated, there is no one fix for each state or province.
Players also pay tax where each game is played, so all road games are different.

We could start limiting signing bonuses, to even the playing field more, as you suggest.
Other than Toronto no one pays 95% of salary in signing bonuses.

 

[beowulf]

Always brought up and not always as big of a deal as some want to make it. Especially if you look at overall cost of living, housing, medical costs for family members, etc. Would not be something easy to put together.

Tkachuk is a loser, he lives in a the lowest taxed province for gawd sake. And at the level of income he has, the US federal rate is 37% while being 33% in Canada. I think Alaska and Florida are the only states to have no income tax at all. So that means he will only play in Florida?

In 2022, American employees pay 7.65% of their wages into social security (6.2%) and Medicare (1.45%). Social security premiums are capped at an income level of $147,000. Medicare premiums have no cap. In Canada for 2022, employees pay 5.70% of gross employment income into CPP up to $61,400. Medicare-style benefits are included as part of the country's healthcare plan.

Deduction are harder to judge as it varies from state to state for those income taxes and in Canada, all except Quebec have the same deductions available if I recall. The biggest one in the US is the ability to deduct interest from a mortgage which is weird to me but how many players buy vs rent etc.

 

[DownIsTheNewUp]

What does Matthew Tkachuk insisting he will only sign in a tax-free state have to do with the management of other teams?

Well It’s already been reported that the list is not at all accurate, so that should end this dead horse of a discussion right there.

 

[WhereAreTheCookies]

Always brought up and not always as big of a deal as some want to make it. Especially if you look at overall cost of living, housing, medical costs for family members, etc. Would not be something easy to put together.

Tkachuk is a loser, he lives in a the lowest taxed province for gawd sake. And at the level of income he has, the US federal rate is 37% while being 33% in Canada. I think Alaska and Florida are the only states to have no income tax at all. So that means he will only play in Florida?

In 2022, American employees pay 7.65% of their wages into social security (6.2%) and Medicare (1.45%). Social security premiums are capped at an income level of $147,000. Medicare premiums have no cap. In Canada for 2022, employees pay 5.70% of gross employment income into CPP up to $61,400. Medicare-style benefits are included as part of the country's healthcare plan.

Deduction are harder to judge as it varies from state to state for those income taxes and in Canada, all except Quebec have the same deductions available if I recall. The biggest one in the US is the ability to deduct interest from a mortgage which is weird to me but how many players buy vs rent etc.

Non income tax states with NHL teams would be Florida, Nevada, Texas, Tennessee, and Washington I believe. However some of those states get their tax dollars in other ways. Texas for example has high sales taxes and property taxes. Tennessee has extremely high sales taxes as well, almost 10% I think.

 

[beowulf]

Non income tax states with NHL teams would be Florida, Nevada, Texas, Tennessee, and Washington I believe. However some of those states get their tax dollars in other ways. Texas for example has high sales taxes and property taxes. Tennessee has extremely high sales taxes as well, almost 10% I think.

Ya sorry I checked the list after I should have before.

 

[NorthCoast]

I'm sure this has been discussed many times in various places at various time, but in light of Matthew Tkachuk's reported "wish list" being all tax-free states (aside from his home in St. Louis), it makes me think.

Seems like a clear disparity that can easily be remedied. Players aren't dumb, or at least their agents aren't. They know what the take home will be in various places so there's no advantage to a team being able to offer more money than another if they work out to the same take-home pay.

Conversely, there's an obvious disadvantage to having to offer a player more than another team just for the take home pay to work out the same when all teams operate under the same cap limit.

The cap was brought in to level the playing field, so let's make sure the playing field is level.

Is there an obvious impediment to this that I am missing?

The impediment is that it's ridiculously complicated.

Every player has unique tax circumstances that allow them to circumvent local tax rates to different levels. The NHL would need full access to every players tax records to see how much of an actual advantage one team has over any other.

This is a good read that shows how it can get complicated based issues unique to a player/players contract:

John Tavares Could Save Nearly $12 Million In Taxes On His New Contract

Canada may have high tax rates but careful planning could save Tavares millions as he plays for his hometown team.

www.forbes.com

If you are worried about parity...eliminating bonuses would have a much more positive impact on parity than trying to level tax rates, as it would prevent big markets from offering front-loaded contracts that small market teams do not have the cash flow to fund. ie: Would Tavares have signed a non-bonus contract with TO? How many other markets can offer the contract Tavares got?

^ This, plus being able to bury contracts in the minors, no limit on buyout budgets (beyond cap implications) have a bigger impact on parity than taxes because taxes really only is in play for the very high-end free agents that can chose their destination, where as the other issues effect all players.

 

[GermanSpitfire]

Just get a good accountant.

 

[beowulf]

The impediment is that it's ridiculously complicated.

Every player has unique tax circumstances that allow them to circumvent local tax rates to different levels. The NHL would need full access to every players tax records to see how much of an actual advantage one team has over any other.

This is a good read that shows how it can get complicated based issues unique to a player/players contract:

John Tavares Could Save Nearly $12 Million In Taxes On His New Contract

Canada may have high tax rates but careful planning could save Tavares millions as he plays for his hometown team.

www.forbes.com

If you are worried about parity...eliminating bonuses would have a much more positive impact on parity than trying to level tax rates, as it would prevent big markets from offering front-loaded contracts that small market teams do not have the cash flow to fund. ie: Would Tavares have signed a non-bonus contract with TO? How many other markets can offer the contract Tavares got?

^ This, plus being able to bury contracts in the minors, no limit on buyout budgets (beyond cap implications) have a bigger impact on parity than taxes because taxes really only is in play for the very high-end free agents that can chose their destination, where as the other issues effect all players.

People tend to not think that these people have accountants and tax lawyers that help them save as much as possible. I mean Canada has TSFA which I would expect most hockey players max out each year to avoid taxes on those investments.

 

[Big Daddy Cane]

Just get a good accountant.

Obligatory:

 

[JaegerDice]

No.

 

[kerrabria]

I'm perfectly in favour of getting rid of the salary cap. Have a luxury tax like the NBA. I hate the salary cap and not even because I'm a Leafs fan, we sucked before the cap too. I hated watching well built teams like the Blackhawks getting dismantled because of the cap.

But if we are going to have a cap for "parity," seems natural to at least have it be fair no?

I don't like the salary cap either, but I'm also not a fan of the luxury tax. The whole NBA salary cap system is completely f***ed. I wouldn't want to emulate them at all with all the extra provisions and adjustments.

 

[KirkAlbuquerque]

yes.

The salary cap in the NHL so so punitive. Look at what Minnesota has to deal with. Look at the Kadri situation, he can't find a team over a week into free agency