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

[Drake1588]

If you open this can of worms, you're going to have to also calculate other factors and it's going to be a morass.

- Income tax rates
- Property tax rates
- Cost of living adjustment for players in Canada who get paid in US dollars but spend them in Canada
- Local higher education costs (college, university) in the US
- Social safety nets, services, free health care, etc.

With taxes, you aren't merely taking away. You're also applying those funds towards the public good and the individual gets benefits from their taxes. It's not cut and dried, but you'll have to factor that in too if you are trying to come up with a universal multiplier for every market, to genuinely even them out. It's absolutely possible to come up with offsets for each of these.

The takeaway is that you quickly find that the markets you think get a real benefit from those adjustments are actually receiving benefits in other areas -- and teams down south will insist that if income tax rates are part of the equation, then these other issues also have to offset the income tax part of the equation.

OP, there isn't a world where the only adjustment they make is for income taxes. The areas where Canadians benefit from their high taxes will be fed back into the calculus too. In the end, you'll find it comes closer to a wash than you expect right now.

The real difference is that fans won't be able to so easily track where a dollar from here is equal to a dollar there because they have to apply these multipliers. Try following the complicated NBA cap. It takes the fan out of the experience.

 

[BLNY]

Yes. Make it based on net income. The only reason to say "no" is because you're a market that currently has an advantage.

 

[GeeoffBrown]

Obviously, each team should be assigned a "desirability coefficient" calculated by a complex algorithm

 

[SnapVirus]

League should only favorise good drafting.

Have 1-2 players that you once drafted, not count against the cap. Each 1st of july, teams could change their list and remove/add a player on their 1-2 list.

That way, team could sign lucrative deal to players (nhlpa would approve), give flexibility to team, cause if the players start to suck they can put him on the "doesnt count against the cap" argument. And it will push team to draft well and keep their "drafted" players. Nothing worst than a good player like Huberdeau/Seth Jones/Debrincat/Tkachuk traded because of salary cap. That way team could put them on their list.

And could possibly be a way to force team to stop hiding old players with massive deal under the "LTIR".

Imagine :
Marner/Matthews
Price/Gallagher
Crosby/Malkin
McDavid/Draisatl
Kane/Toews
Bergeron/Marchand
Makar/Mackinnon
Ovechkin/Backstrom

All those players not counting against the cap. It would give way more flexibility to teams, and help deep pockets team to have a little bit of leverage. Deep pockets teams are the one the most f*** with the taxes, so it would balance things out.

 

[The Hanging Jowl]

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.

Only thing about this is it's actual work. I'm sure there are players that don't want the hassle of showing up for a commercial shoot, etc. The tax break just happens with no effort needed. I.e., these two advantages are not apples to apples.

 

[Jumptheshark]

Here is the thing. When it comes to taxes. We can not look at taxes from that of a normal person or couple paying taxes.

In Business you write off a lot of stuff that normal people are unable to do. It is very complicated---but due to the demands of being a pro-athlete..I know several who are able write off their monthly food budget year round because they have to eat a certain way. Some states allow this but not all

so the answer to the question is not as easy to answer as some might think

 

[McJedi]

No. If a certain area wants to tax more, you apparently get what you pay for. Both governments are democratly elected. Cap should absolutely not be adjusted for taxes, cost of living or the like.

 

[DuklaNation]

The interpretation provided is not accurate. There is no such thing as non taxable income or income taxable at 15% … if that were the case the US players would be flocking to play in Canada… we know it to be quite the opposite.

15% is a withholding tax. I would guess 95%+ of the US/Canada tax treaty is to eliminate double taxation of income. That being said, some of the commentary is questionable.

I'd point out you're all missing the deductions aspect, investment income, tax rates after initial accrual. Most of the discussion on this topic focuses on the initial tax rate for that year's income. I'd also point out that moving to different domiciles can create some interesting tax planning opportunities.

However, the current system is broken. The inverse has occurred where favourable locations have a higher cap via lower salaries paid. So any argument against making adjustments is just hypocritical.

 

[Nihiliste]

Yes. Make it based on net income. The only reason to say "no" is because you're a market that currently has an advantage.

No, the reason to say no is that the purpose of the cap is to provide owners with cost certainty, not to create parity

 

[Golden_Jet]

League should only favorise good drafting.

Have 1-2 players that you once drafted, not count against the cap. Each 1st of july, teams could change their list and remove/add a player on their 1-2 list.

That way, team could sign lucrative deal to players (nhlpa would approve), give flexibility to team, cause if the players start to suck they can put him on the "doesnt count against the cap" argument. And it will push team to draft well and keep their "drafted" players. Nothing worst than a good player like Huberdeau/Seth Jones/Debrincat/Tkachuk traded because of salary cap. That way team could put them on their list.

And could possibly be a way to force team to stop hiding old players with massive deal under the "LTIR".

Imagine :
Marner/Matthews
Price/Gallagher
Crosby/Malkin
McDavid/Draisatl
Kane/Toews
Bergeron/Marchand
Makar/Mackinnon
Ovechkin/Backstrom

All those players not counting against the cap. It would give way more flexibility to teams, and help deep pockets team to have a little bit of leverage. Deep pockets teams are the one the most f*** with the taxes, so it would balance things out.

So give the rich teams an extra 20 million in cap basically, just creates more problems.

 

[Stephen]

League should only favorise good drafting.

Have 1-2 players that you once drafted, not count against the cap. Each 1st of july, teams could change their list and remove/add a player on their 1-2 list.

That way, team could sign lucrative deal to players (nhlpa would approve), give flexibility to team, cause if the players start to suck they can put him on the "doesnt count against the cap" argument. And it will push team to draft well and keep their "drafted" players. Nothing worst than a good player like Huberdeau/Seth Jones/Debrincat/Tkachuk traded because of salary cap. That way team could put them on their list.

And could possibly be a way to force team to stop hiding old players with massive deal under the "LTIR".

Imagine :
Marner/Matthews
Price/Gallagher
Crosby/Malkin
McDavid/Draisatl
Kane/Toews
Bergeron/Marchand
Makar/Mackinnon
Ovechkin/Backstrom

All those players not counting against the cap. It would give way more flexibility to teams, and help deep pockets team to have a little bit of leverage. Deep pockets teams are the one the most f*** with the taxes, so it would balance things out.

I think some form of franchise tag makes sense, since those players basically form the identity of their franchises over x number of years anyway.

 

[McVespa99]

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.

This is the best example of why the cap needs to be tax adjusted. If you want to have a cap for parity it has to be fair.

 

[TaLoN]

It's not Taxes.

You think Johnny Hockey took such a huge discount in Columbus vs Calgary because of taxes?

 

[DuklaNation]

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.

You must factor in the yield on income after taxes. Lets say Gaudreau saves $500K each year just on taxes by working and residing in OH. Now consider what he can do with that "annuity" for the contract duration. He could garner an extra $8M in total just from that alone by the end of the contract. I haven't done personal returns in a long time but there are a lot of considerations not discussed here.

 

[zcaptain]

I think it is fair to have a Tax and living expense calculation factor in the Cap ceiling and Floor system.............

Then it becomes, a best management and luck system............................

I mean, why have an equalization (Revenue sharing) that is meant to even out the revenue, if you are not going to level out the rest of it?

I mean, why would Canadian teams pay have not teams (Arizona and up to lately Florida) for that, if they do not get some fairness in Cap Space, put into the formula as well?

 

[snag]

ya my bad I looked back and realized it was OAS I was thinking of.

Figure that. Would merely give you a thumbs up but the Gestapo broke my thumbs.

 

[zcaptain]

No. If a certain area wants to tax more, you apparently get what you pay for. Both governments are democratly elected. Cap should absolutely not be adjusted for taxes, cost of living or the like.

Easy for you to say, with no Provincial Taxes.................lol

 

[TaLoN]

You must factor in the yield on income after taxes. Lets say Gaudreau saves $500K each year just on taxes by working and residing in OH. Now consider what he can do with that "annuity" for the contract duration. He could garner an extra $8M in total just from that alone by the end of the contract. I haven't done personal returns in a long time but there are a lot of considerations not discussed here.

Which is irrelevant, because he was offered more than he would save on taxes and still turned them down. His yields thus could've been higher.

He didn't go to Columbus because of taxes. He just didn't want to live in Calgary. Yes, Columbus isn't home, but it's a MUCH shorter trip from Columbus to NJ than Calgary. That was his apparent priority. Not taxes.

 

[McJedi]

Easy for you to say, with no Provincial Taxes.................lol

Consequences and benefits of your vote. Live with it.

 

[zcaptain]

Consequences and benefits of your vote. Live with it.

What a childish answer................totally expected!

 

[Lazlo Hollyfeld]

Yes. Make it based on net income. The only reason to say "no" is because you're a market that currently has an advantage.

Or for the other thousands of reasons to say no that have been listed in all of these threads.

Basing the salary cap on a player's individual person net income is as impractical as it is ridiculous.

 

[crowsnestmcgee]

I would say high cost of living, shitty weather and overall quality of life are a bigger issue than taxes. As mentioned above players get taxed on road games.

I mean Montreal, Toronto, Ottawa, Winnipeg, Edmonton are all terrible compared to the majority of US cities in the NHL.

montreal and toronto are dope cities wtf are you talking about a bunch of the american cities in nhl are shitholes

 

[DuklaNation]

Which is irrelevant, because he was offered more than he would save on taxes and still turned them down. His yields thus could've been higher.

He didn't go to Columbus because of taxes. He just didn't want to live in Calgary. Yes, Columbus isn't home, but it's a MUCH shorter trip from Columbus to NJ than Calgary. That was his apparent priority. Not taxes.

Maybe he did. I'm just using it as an example. Yields on after tax income matter a lot for higher income individuals. People in middle class aren't factoring that part in. Its a major consideration beyond the tax rate on a single year's income. And is constantly ignored in the discussions here. Probably because it destroys the narrative.

 

[McJedi]

What a childish answer................totally expected!

And yet also reality. No one is coming to financial aid of the high tax teams. There is no leveling of this tax burden playing field.

It’s simply a choice of the electorate. Deal.

 

[Lazlo Hollyfeld]

This is the best example of why the cap needs to be tax adjusted. If you want to have a cap for parity it has to be fair.

Everyone say it with me now, loud enough for the folks in the back:

THE CAP IS FOR COST CERTAINTY FOR THE OWNERS, NOT PARITY FOR THE TEAMS.