Marc Methot saving 1.4 million dollars.

[majormajor]

Exactly.

Toronto fans love to cry about the tax rate, but yet that market can offer their players the best and highest sponsorship deals and opportunities out there. As a Dallas fan, should I cry that we don't have a Rogers, Canadian Tire, etc. etc. lining up to offer our players millions of dollars? So unfair!!

Should Arizona fans cry and complain that the vast majority of teams have a much larger budget for staff, facilities, scouting, development?

Should all USA teams cry that players are paid in USD, so Canadian teams players money goes further for them in the City they are living.

Should Toronto, LA, and NYR cry and complain that their daily living expenses are 5x those of Winnipeg and Columbus?

THERE WILL NEVER BE A 100% LEVEL PLAYING FIELD.

Toronto is by far the best city for sponsorships and even there it is miniscule. It is simply not a big part of player income unless your name is Sidney Crosby or Connor McDavid. You're talking about six figures for elite forwards and nearly zero for most players, that's a small fraction of the difference in the tax bill. Players simply get more money in Texas, which yes, is a massive unfair advantage in a salary cap league.

You couldn't address cost of living factors in a clean way because that is obviously different for everybody. There's a simple quantifiable fix for the tax issue - have the salary cap apply to post-tax income. There's no such simple fix for all the other myriad factors like amenities and housing costs.

By the way your point about USD going further in Canada is misleading. It's not cheaper to live in Canada. It has the same housing issues like anywhere else, that varies market to market, not country to country.

 

[thefutures]

Alright you've twisted my arm. Adopt 1 tax policy where the leagues business officially runs out of one place, let's pick California because **** these players.

 

[majormajor]

Just as sponsorships are quantifiable also. Remember when the Leafs brought the CEO of Canadian Tire to negotiations with Stamkos to entice him with multi million dollar sponsorships? That wouldn't apply to caps but are used by big market teams to circumvent the cap too.

I hadn't heard of that.

You sure it wasn't Canadian Tire Money?

 

[Troy McClure]

it goes like this;

1. someone on twitter makes a claim
2. a player corroborates it
3. people on HF say the player is wrong

never change

It's not that he's wrong but that his situation doesn't represent what most players experience because most players play a bunch of road games. Someone on IR never playing road games isn't paying the same in taxes as his teammates who are going on road trips where they wind up paying state and city taxes.

Ben Bishop this season also saved a ton in taxes because he spent the entire season on IR, but his fellow goalie Khudobin will pay more in taxes thanks to playing a bunch of road games.

 

[zizbuka]

You do realize these hockey players pay almost half their salary in taxes, right?

The rich pay millions in taxes each year.

The only overhaul we need it there to be less taxes.

Corporate taxes? We need loopholes closed, shelters eliminated, off shore money taxed.

 

[OppositeLocK]

Corporate taxes? We need loopholes closed, shelters eliminated, off shore money taxed.

Why? So businesses can pay "their fair share" and so local govts can then squander it on bloated budgets, nepotism, and crony contracting?

It's not a loophole to follow the tax code. Once again, tax planning is not tax avoidance. The fact that a company doesn't want to set up shop in high tax locations is nobody's fault but your own for electing incompetent "leaders".

Tell me, why is it wrong to take from someone else for yourself, but it's so altruistic and "good" to take from others to give to others?

 

[DistantThunderRep]

I hadn't heard of that.

You sure it wasn't Canadian Tire Money?

Since he re-signed in Tampa. I am going to say yes it was. lol

 

[OppositeLocK]

People knew that shit was a scam even as RMFR was pushing it in his campaign. I hope it's hot in hell these days.

No you're right, we should double, hell, TRIPLE, the current tax rates. That'll surely create jobs.

 

[Hockey Outsider]

Post-tax income is an easily quantifiable thing that you can apply a salary cap to. City amenities? Not at all.

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]

Taxes in California have triggered a mass amount of money running to texas.

That's mostly zoning restrictions on housing development (i.e. apartment bans). People are moving to Texas because California has decided not to make any more room for people.

 

[TooManyHumans]

Why? So businesses can pay "their fair share" and so local govts can then squander it on bloated budgets, nepotism, and crony contracting?

It's not a loophole to follow the tax code. Once again, tax planning is not tax avoidance. The fact that a company doesn't want to set up shop in high tax locations is nobody's fault but your own for electing incompetent "leaders".

Tell me, why is it wrong to take from someone else for yourself, but it's so altruistic and "good" to take from others to give to others?

Businesses rely on functioning infrastructures. There is nothing unfair in expecting them to pay part of the costs.

 

[OppositeLocK]

Businesses rely on functioning infrastructures. There is nothing unfair in expecting them to pay part of the costs.

The problem is how you start determining these "costs". Right now taxes are being used to fund far more than infrastructure.

But then again, to modern governments social programs are "infrastructure".

 

[MrHeiskanen]

Toronto is by far the best city for sponsorships and even there it is miniscule. It is simply not a big part of player income unless your name is Sidney Crosby or Connor McDavid. You're talking about six figures for elite forwards and nearly zero for most players, that's a small fraction of the difference in the tax bill. Players simply get more money in Texas, which yes, is a massive unfair advantage in a salary cap league.

You couldn't address cost of living factors in a clean way because that is obviously different for everybody. There's a simple quantifiable fix for the tax issue - have the salary cap apply to post-tax income. There's no such simple fix for all the other myriad factors like amenities and housing costs.

By the way your point about USD going further in Canada is misleading. It's not cheaper to live in Canada. It has the same housing issues like anywhere else, that varies market to market, not country to country.

"Other top earners include Maple Leafs forwards Auston Matthews ($2.3M), Mitch Marner ($2M), and John Tavares ($1.7M)"

The NHL really needs to implement a stop to sponsorship deals, it's just not fair to smaller market teams.

 

[majormajor]

Why? So businesses can pay "their fair share" and so local govts can then squander it on bloated budgets, nepotism, and crony contracting?

It's not a loophole to follow the tax code. Once again, tax planning is not tax avoidance. The fact that a company doesn't want to set up shop in high tax locations is nobody's fault but your own for electing incompetent "leaders".

Tell me, why is it wrong to take from someone else for yourself, but it's so altruistic and "good" to take from others to give to others?

The technical term for what you are describing is "tax avoidance". I think what you're trying to say is "tax avoidance" is not "tax evasion".

I would gladly take from Jeff Bezos' account to give to the poor. Nothing immoral about that. The rules of the game determine how much money people can accumulate, it's not some dictate of heaven that Jeff Bezos has $186 Billion dollars. That's an outcome of societal processes according to rules that we make.

 

[OppositeLocK]

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.

Great post, you know your stuff.

 

[majormajor]

Other top earners include Maple Leafs forwards Auston Matthews ($2.3M), Mitch Marner ($2M), and John Tavares ($1.7M)

And how many more multi-million dollar sponsorships are there? 3?

Funny enough those Leafs are going to lose their sponsorships if they keep losing in the first round.

 

[Burke the Legend]

I'm not a tax expert but I think some Canadian players have some ways to reduce taxes. I think I read that the bonus heavy structure is taxed more favourably than income, at least in Ontario. Also that a RCA is often setup for the players and can take some of sting out of the higher rate.

 

[OppositeLocK]

The technical term for what you are describing is "tax avoidance". I think what you're trying to say is "tax avoidance" is not "tax evasion".

I would gladly take from Jeff Bezos' account to give to the poor. Nothing immoral about that. The rules of the game determine how much money people can accumulate, it's not some dictate of heaven that Jeff Bezos has $186 Billion dollars. That's an outcome of societal processes according to rules that we make.

That is correct. However, depending on where you are there are provisions called the General Anti Avoidance Rules. Taxes are inevitable and I don't like to use the term avoidance because that's not the spirit of tax planning/optimization.

Tax Avoidance - Canada.ca

I disagree with you on taking from Bezos. But okay, what's the max amount of money do you feel someone should have before it's okay for you to take it?

 

[majormajor]

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.

I explained this in another post. What you'd need to calculate wouldn't be an exact post-tax income. You'd just need to use a simple consistent formula that gets you a good estimate.

You don't have to constantly update it and you don't want to. Just come up with a cap number when the contract is signed and that number stays with the player even if they are traded and their actual income changes. The point is to avoid systematic biases where some teams have $10m+ pay advantages over others, not to come up with something that exactly replicates actual post-tax income down to the penny.

Point by point

- yes you're calculating the cap hit for each player and then adding it up. That's how the current system works too, it's not that complicated. I could estimate your tax hit in thirty seconds if I know your income and what each of the tax brackets are.

- I'm not aware of any systemic bias where some teams are favored more than others because of players living in one jurisdiction while playing in another. This is a current issue, so would be no worse in a post-tax salary cap, and I'm not sure there is a need to change it.

- One way to handle this is to count bonuses as having the same implied tax as regular salary. That would just be implied for the purposes of counting the post-tax salary cap. It wouldn't be based on the actual tax bill and wouldn't have to be.

- You can just factor in an average amount of deductions for an athlete in that location and bracket and use that. Who makes these decisions? The formula is bargained and it goes in the CBA, like everything else. You know how complicated the CBA is? This isn't more complicated.

- Road taxes mostly average out across players, no need to even bother with small differences like that.

 

[OppositeLocK]

I explained this in another post. What you'd need to calculate wouldn't be an exact post-tax income. You'd just need to use a simple consistent formula that gets you a good estimate.

You don't have to constantly update it and you don't want to. Just come up with a cap number when the contract is signed and that number stays with the player even if they are traded and their actual income changes. The point is to avoid systematic biases where some teams have $10m+ pay advantages over others, not to come up with something that exactly replicates actual post-tax income down to the penny.

Point by point

- yes you're calculating the cap hit for each player and then adding it up. That's how the current system works too, it's not that complicated. I could estimate your tax hit in thirty seconds if I know your income and what each of the tax brackets are.

- I'm not aware of any systemic bias where some teams are favored more than others because of players living in one jurisdiction while playing in another. This is a current issue, so would be no worse in a post-tax salary cap, and I'm not sure there is a need to change it.

- One way to handle this is to count bonuses as having the same implied tax as regular salary. That would just be implied for the purposes of counting the post-tax salary cap. It wouldn't be based on the actual tax bill and wouldn't have to be.

- You can just factor in an average amount of deductions for an athlete in that location and bracket and use that. Who makes these decisions? The formula is bargained and it goes in the CBA, like everything else. You know how complicated the CBA is? This isn't more complicated.

- Road taxes mostly average out across players, no need to even bother with small differences like that.

And if a player can earn more endorsements in a location with high taxes should that also be adjusted for? How often should the cap be adjusted?

Your post is a great example of why when the govt meddles they almost always make it worse.

 

[majormajor]

And if a player can earn more endorsements in a location with high taxes should that also be adjusted for? How often should the cap be adjusted?

Your post is a great example of why when the govt meddles they almost always make it worse.

No need to adjust for endorsements because there's only a few players making seven figure endorsements.

We're talking about differences in post-tax income across teams between $10m and $30m, that's the real issue here.

Trying to "whatabout" smaller issues is just lame.

 

[OppositeLocK]

No need to adjust for endorsements because there's only a few players making seven figure endorsements.

We're talking about differences in post-tax income across teams between $10m and $30m, that's the real issue here.

Trying to "whatabout" smaller issues is just lame.

Then lobby your local government to have them reduced. They're paid the same, not the other teams' fault your govt is greedy.

 

[majormajor]

Then lobby your local government to have them reduced. They're paid the same, not the other teams' fault your govt is greedy.

I wouldn't want rich people's taxes reduced, I like having a more equal society. In any case why would I base my societal preferences around what works for the NHL? The league adjusts to reality not the other way around.

 

[Hockey Outsider]

Great post, you know your stuff.

Haha, let's hope so, considering I do this for a living!

 

[OppositeLocK]

I wouldn't want rich people's taxes reduced, I like having a more equal society. In any case why would I base my societal preferences around what works for the NHL? The league adjusts to reality not the other way around.

You're the one proposing they change it. Glad to see you realize the absurdity of it.

Society is already equal. If you want to raise taxes make the first step and contribute more to society yourself.

I believe in personal responsibility. The government shouldn't have to be your caregiver.