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

[nbwingsfan]

It’s not talking detailed personal financials. I asked each of these players specifically if state taxes are a factor in their contract negotiations and each of them said that they were definitely a factor.

I also have not complained about the taxes just pointing out that it is clearly a factor in certain scenarios. One of those scenarios being the Lightnings top players all signing for discounts.

And Toronto gets massive discounts from Ontario players, so why even bring it up?

Should be make a Toronto citizen tax thread ?

 

[Lazlo Hollyfeld]

The Florida Panthers have been in the league for 28 years:

20 of those years they didn't make the playoffs.
6 of those years they didn't make it out of the first round.
1 time in those 28 years they made it to the Finals, in 1996.


Obviously the lack of state tax is giving them an unfair advantage.

 

[Yackiberg8]

And Toronto gets massive discounts from Ontario players, so why even bring it up?

Should be make a Toronto citizen tax thread ?

You certainly can and I can guarantee you I won’t be upset/care if you do. If you want to start that and have the discussion then please do.

 

[Lazlo Hollyfeld]

Considering the number of teams in the US that are litterally kept alive by canadian contributions to the NHL vault, the least you can do is have the discussion. Seems like a decent chuck of US fans cherry pick when capitalism actually applies for them.

There is a team that could win a 3rd stanley cup in a row that struggles to post a net operating income. Let that sink in.

Those are two different issues.

The OP is arguing about the "advantage" US franchises have in states where there is no state tax. You're referring to franchise profitability and profit sharing.

 

[VivaLasVegas]

Query: Is this the lamest excuse ever for a team's consistent underperformance?

 

[nbwingsfan]

You certainly can and I can guarantee you I won’t be upset/care if you do. If you want to start that and have the discussion then please do.

There’s no point, just like there’s no point having this conversation.

Every team has their own unique advantage/disadvantages when it comes to signing players. Solely complaining about taxes is just looking for excuses.

Other than Tampa have any low tax teams won since the Cap?

 

[njdevil26]

Not a coincidence that the states with no income tax are consistently icing teams that excel:

Tampa Bay Lightning
Florida Panthers
Las Vegas
Dallas

Also not a coincidence that Canadian teams, with a much higher income tax rate aren’t coming close to winning a Stanley Cup, a 29 year drought.

Time for the NHL to even the rather lopsided playing field and consider after tax income when setting the payroll cap

One team in that list has actually won anything. Dallas and Vegas made it to the final sure... but Vegas is hellbent on ruining their own roster despite the tax savings...

The Panthers built a team in a very smart way. Their big signing (Bobrovsky) is kind of a bad contract! He certainly didn't take a discount either.

There's definitely not enough evidence to support this being a problem. The stars for the Lightning are players they drafted for the most part. It's not like they are getting all the top free agents.

Panarin went to NYC, Hamilton went to NJ... two places with a ton of taxes.

Tennessee has no state tax.... they build a team through insane drafting and smart signings.. They weren't netting top free agents looking to not pay taxes.

This really isn't a real problem.

 

[nbwingsfan]

One team in that list has actually won anything. Dallas and Vegas made it to the final sure... but Vegas is hellbent on ruining their own roster despite the tax savings...

The Panthers built a team in a very smart way. Their big signing (Bobrovsky) is kind of a bad contract! He certainly didn't take a discount either.

There's definitely not enough evidence to support this being a problem. The stars for the Lightning are players they drafted for the most part. It's not like they are getting all the top free agents.

Panarin went to NYC, Hamilton went to NJ... two places with a ton of taxes.

Tennessee has no state tax.... they build a team through insane drafting and smart signings.. They weren't netting top free agents looking to not pay taxes.

This really isn't a real problem.

I’ve noticed a good 90% of the people who actually complain about this are just fans of a certain Canadian franchise who can’t even seem to notice their own advantages they have over most teams.

It’s just another excuse for their own teams failures

 

[BrokenFace]

You mean like when toronto went out and spent 50 million on a coach they fired 4 years into his 8 year deal?

Bingo. If we take away the advantage some teams have for being in a low/no tax state, then we also need to take away the advantage some teams have for having nearly limitless funds to hire staff.

 

[ottawa]

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.

What an ignorant comment lol...the cost of living in 5 out of our 7 cities is far higher than any of the cities in OP. Not sure about the costs of living in Winnipeg and Edmonton but it might also be higher.

 

[Gil Gunderson]

Can we also restrict signing bonuses from teams that play in larger cities/bigger markets, or is that too much?

 

[Hockey Outsider]

Where is the 15% idea coming from? In the US, supplemental income is taxed at ordinary rates . There are different withholding requirements for bonuses but all are higher than 15% and that doesn’t change the tax due, just the amount withheld by the employer. Why would they pay only 15% on a signing bonus?

Article XVI of the Canada-US tax treaty

See this article for a good (non technical) explanation: Auston Matthews Shoots and Scores Tax Savings | Crowe Soberman LLP

The article estimates that over the course of Matthews' contract, due to how his remuneration has been structured, he'll save around $13M. This is another example of how determining someone's after-tax compensation is much more complicated than simply applying the average rate for a given state or province. Matthews plays in Toronto, but effectively is paying tax at the Arizona rate on the vast majority of his earnings.

(Lest anyone think I'm criticizing him, good for Matthews for being smart enough to get good tax advice).

 

[LaCarriere]

Considering the number of teams in the US that are litterally kept alive by canadian contributions to the NHL vault, the least you can do is have the discussion. Seems like a decent chuck of US fans cherry pick when capitalism actually applies for them.

There is a team that could win a 3rd stanley cup in a row that struggles to post a net operating income. Let that sink in.

What's your point regarding revenue sharing? Having states/provinces/countries with different taxes, and deciding if there should be some system in place to adjust for this is different than revenue sharing.

Tampa isn't a hockey market. TV revenue, ticket sales, etc just aren't the same as in Toronto, Montreal, NY for many smaller cities/hockey markets. Revenue sharing is really more in place to help teams in smaller markets reach the cap floor. By all means, get rid of revenue sharing, ditch the salary cap, watch TV deals crumble, the league fold to 10-12 teams tops, and then maybe a Canadian team can win a cup. Is that good for hockey?

HHR/revenue sharing and different taxes aren't why canadian teams have continually failed. They have all been horribly mismanaged at some point during the last 30 years, and have failed when they've had a chance. Since 93 every canadian team (Vancouver 2x - 1994/2012) has been to the finals except toronto and winnipeg. That's 6 kicks at the can, and 6 misses. If canadian teams won 4+ of those times nobody would even care about tax differences or having this discussion. Then you have all the leaf meltdowns, and late round exits from canadian teams since 93 on top of those 6 cup final losses.

Everyone here is looking for some excuse for canada not winning a cup and are blaming it on something as insignificant as taxes, when the reality is most canadian teams are dumpster fires, and there's likely a dozen more important factors that determine where a free agent goes.

 

[WeatherBeaten]

Article XVI of the Canada-US tax treaty

See this article for a good (non technical) explanation: Auston Matthews Shoots and Scores Tax Savings | Crowe Soberman LLP

The article estimates that over the course of Matthews' contract, due to how his remuneration has been structured, he'll save around $13M. This is another example of how determining someone's after-tax compensation is much more complicated than simply applying the average rate for a given state or province. Matthews plays in Toronto, but effectively is paying tax at the Arizona rate on the vast majority of his earnings.

(Lest anyone think I'm criticizing him, good for Matthews for being smart enough to get good tax advice).

Thanks. It sound like he’ll pay 15% to the Canadian taxing authority. Presumably he’ll be required to pay US federal income taxes as well at his normal rate which is then reduced to reflect the amount he paid to Canada per the US Canada tax treaty.

 

[Golden_Jet]

Thanks. It sound like he’ll pay 15% to the Canadian taxing authority. Presumably he’ll be required to pay US federal income taxes as well at his normal rate which is then reduced to reflect the amount he paid to Canada per the US Canada tax treaty.

Yes on the 5% of salary that is not signing bonus, and only for the US games, so maybe on 3% of salary.
On the 95% signing bonus, it’s max 15%, nothing goes to the US.

 

[Rschmitz]

This again

Write to your local government and petition them to lower taxes. No? Stop whining

 

[Sol]

Don’t see a good argument against this. They should even out across the board. It’s a pretty big deal.

 

[PensPlz]

This again

Write to your local government and petition them to lower taxes. No? Stop whining

In this day and age talking about low taxes is enough to be labeled a right-wing extremist...

But I agree. People want to live in high-tax areas and reap all the benefits and have none of the downsides. And that's just not how it works.

 

[Lazlo Hollyfeld]

Don’t see a good argument against this. They should even out across the board. It’s a pretty big deal.

See below:

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.

 

[Rschmitz]

In this day and age talking about low taxes is enough to be labeled a right-wing extremist...

But I agree. People want to live in high-tax areas and reap all the benefits and have none of the downsides. And that's just not how it works.

Yep, I'm a left leaning school teacher, "taxes" would certainly help teacher pay no doubt, and they should be higher.

Having said that, I understand that fundamentally our state taxes differently. We don't have a personal state income tax but we do have relatively high local taxes (land and sales). It makes sense, we have a ton of retirees here in Florida on fixed income and a ton of tourists, it's one way to capture that revenue without hurting old folk as much.

That's why it's so whiny to argue taxes. Do players in Tampa get a break on sales and land taxes? How are you going to calculate such an ambiguous and arbitrary disadvantage? You can't

 

[KirkAlbuquerque]

LA won two Cups this past decade and California has basically the highest taxes in the States. And higher taxes than Alberta (maybe other provinces too).

Low income tax isn't why Tampa could draft Kucherov and Vasilevsky "late" and have them turn into superstars.

no but it allows them to sign them for lower AAV

 

[tucker3434]

After tax payroll cap? Do you know how taxes work?

 

[WarriorofTime]

My favorite are the "let's not let perfect be the enemy of good! Some kind of average could work"

No... the "loopholes" completely swallow the rule. Tax planning is very complicated. For instance, Matthews gets almost all of his comp in the form of a signing bonus. Since the Leafs print cash, they have the liquidity to pay it out up front whereas some small market team like Winnipeg likely needs hockey operations to fund expensive player salaries. This allows Matthews to pay a lot less Ontario tax... so if you do so some sort of average you're actually giving teams in "high tax" jurisdictions way more cap space, so just doing the opposite of the problem you intended to curb.

Let's not make the accountants the new biggest stars of the NHL. I much prefer when teams are rewarded for drafting well and making smart trades in a hard capped league, not because they know the ins and outs of the tax code best.

 

[seafoam]

Not a coincidence that the states with no income tax are consistently icing teams that excel:

Tampa Bay Lightning
Florida Panthers
Las Vegas
Dallas

Also not a coincidence that Canadian teams, with a much higher income tax rate aren’t coming close to winning a Stanley Cup, a 29 year drought.

Time for the NHL to even the rather lopsided playing field and consider after tax income when setting the payroll cap

However it is a coicidence that every Canadian team has been or is still being run by morons for the last 29 years.

 

[WeatherBeaten]

Yes on the 5% of salary that is not signing bonus, and only for the US games, so maybe on 3% of salary.
On the 95% signing bonus, it’s max 15%, nothing goes to the US.

I find that very hard to believe. If that’s accurate it gives Canadian teams a tremendous advantage in terms of taxation as long as they can afford to pay in signing bonuses rather than salary. The players would just have to establish US residency and pay significantly less taxes than they would playing for a team in the US.