NHL monitoring teams’ income-tax advantages, but ‘there are no easy fixes’

[JoVel]

There is an easy fix for this actually. If you don't like it, you can always relocate your team to a state with no income tax.

 

[Beukeboom Fan]

There are tax planning/sheltering schemes in some jurisdictions that are advantageous but take years or decades to show benefit. It truly is not that simple.

Silky - the guy you were quoting was intentionally throwing gas on the fire for funsies.

 

[majormajor]

The easy fix is actually to just use an estimate of post tax payment for the cap hit. It's not that complicated, they just don't want to do it.

 

[CheckingLineCenter]

Jarnkrok is probably better known than Wyatt Johnston or Heiskanen in their respective markets. Every team has it’s advantages.

Every league deals with this, for whatever reason (Canadian presence?) the NHL is worried about it when the focus should be increasing revenue and thus increasing salaries. Also increasing the player share of revenue and the cap overall.

Owners are probably happy to shift the focus to this distraction lmao.

 

[Scrantonicity 2]

Not this debunked horseshit again.

 

[Beukeboom Fan]

UFAs sure, but they're getting 10-20% discounts on virtually every re-signing. It's definitely not nothing

In a RFA contract situation - why does the tax rate matter? Everything is entirely out of the teams control, except their contract offer. I guarantee you that RFA's aren't leaving $'s on the table because they happen to live a no-state tax location.

 

[Lazlo Hollyfeld]

I was just thinking about how we needed another 40+ pages of tax discussion for September.

and mostly by people who have an extremely limited understanding of how taxes work.

 

[Section 104]

New York Times? Fake news paper

 

[tarheelhockey]

Just let teams be domiciled wherever they want...

Can’t wait for the Canes to form a shell company and collect escrow in rubles

 

[LOFIN]

The easy fix is actually to just use an estimate of post tax payment for the cap hit. It's not that complicated, they just don't want to do it.

No, it is in fact very complicated and thus not done

 

[gstommylee]

The easy fix is actually to just use an estimate of post tax payment for the cap hit. It's not that complicated, they just don't want to do it.

and i doubt something like that is legal. You can't have different salary cap amounts based on what players make post taxes.

 

[majormajor]

No, it is in fact very complicated and thus not done

The complexity is if you want an EXACT answer of what future post-tax payments will be, because they can't actually be known in advance. But you can use a formula to make a close estimate, something that will get you 90-99% there. Balancing the incentives of players when they sign is what matters, getting the exact number does not.

This is somewhat of a lawyers vs economists type of argument, and since I am actually an economist I'm taking that side unsurprisingly. If you want to get the incentives right, it's better to be inexact and close than to be exactly far off.

and i doubt something like that is legal. You can't have different salary cap amounts based on what players make post taxes.

Which law are you talking about? Salary caps are an internal matter decided by leagues, not something that the law touches on. At least nothing I've ever heard of.

 

[ItWasJustified]

 

[Fish on The Sand]

https://www.nytimes.com/athletic/5760827/2024/09/12/nhl-panthers-lightning-income-tax-advantages/

Oh look, teams and players clearly see and feel the tax advantages. I remember people being adamant for yearssssss that it doesnt matter and players don't care about it. "Just get a good accountant and you'll make the same!!!!!" they would preach. Are those people still going to try and deny this advantage ?

I'm not convinced this is a huge deal.

The number of teams winning from those states is largely coincidental and it's not like these teams are doing it by securing big name UFAs like you would expect if players were choosing these teams based on taxes.

 

[The Gr8 Dane]

Couldn't be the garbage nepotism friend of friends GM's that have plagued every single Canadian team for decades nope its taxes

 

[Jared Dunn]

thats just Zito magic


but i guess we gotta return the 30 cups we won being so benefited by taxes

Obviously running the organization well is an important component, I do think the issue as a whole is overstated but to completely dismiss it as a non-factor seems intentionally obtuse

 

[HansonBro]

Just spit balling here but could it work fairly if the cap was pro rated?

Say cap was $100 million. Team X with no income tax remains at $100 million.

Team Y with 13% income tax gets pro rated to a cap of $113 million.

Does that solve the money equation? Im sure someone will have a counter point, which im genuinely curious to hear

 

[Three On Zero]

Pretty minor and insignificant issue that fans want to make into a big and meaningful issue. Most of the no state tax markets are also currently highly desirable markets for reasons beyond that.

 

[Toby91ca]

The complexity is if you want an EXACT answer of what future post-tax payments will be, because they can't actually be known in advance. But you can use a formula to make a close estimate, something that will get you 90-99% there. Balancing the incentives of players when they sign is what matters, getting the exact number does not.

This is somewhat of a lawyers vs economists type of argument, and since I am actually an economist I'm taking that side unsurprisingly. If you want to get the incentives right, it's better to be inexact and close than to be exactly far off.



Which law are you talking about? Salary caps are an internal matter decided by leagues, not something that the law touches on. At least nothing I've ever heard of.

I think there is incredible complexity to it, factoring in signing bonuses, timing thereof and then even if you can figure that out, applying and managing that in for salary cap just makes in more complex.

I think the easiest way to combat this would simply be to determine a team by team salary cap. So salary cap for a Florida team is $80M, but salary cap for California team is $92M. Something very high level and general like that. do a super high level estimate of the % advantage and then apply it. That would be incredibly easy to manage. For teams, it would be management the same way they always have been managing, they just take the number you give. The work, which really shouldn't be that much work, is estimating how to even it out across all teams, but that should really be a thing that gets updated as tax rules in different jurisdictions get updated.

 

[Toby91ca]

Just spit balling here but could it work fairly if the cap was pro rated?

Say cap was $100 million. Team X with no income tax remains at $100 million.

Team Y with 13% income tax gets pro rated to a cap of $113 million.

Does that solve the money equation? Im sure someone will have a counter point, which im genuinely curious to hear

That's what I was thinking, but slightly more complicated than that.....in your situation, a player playing for Team X wouldn't have 0% tax as they'd be paying tax in different jurisdictions, it's just the majority of their income would be attributed to the nil tax home state. Same with Team Y, the player wouldn't have all of their income at 13%.

But yeah, was thinking the same thing, shouldn't be hard to try and estimate what the advantage or disadvantages are. It's not an exact science though, lots of complications around bonus structures, etc., so the high level determined caps by team would need review and agreement by all involved.

 

[Golden_Jet]

Just spit balling here but could it work fairly if the cap was pro rated?

Say cap was $100 million. Team X with no income tax remains at $100 million.

Team Y with 13% income tax gets pro rated to a cap of $113 million.

Does that solve the money equation? Im sure someone will have a counter point, which im genuinely curious to hear

Don’t think that works, unless get rid of signing bonuses. Look at Matthew’s as an American playing in Canada. He only pays 15% taxes on his 95% bonus money.

Just one example.

 

[Soundwave]

The easy fix is actually to just use an estimate of post tax payment for the cap hit. It's not that complicated, they just don't want to do it.

Pretty much. It could be done easily.

 

[Mattilaus]

This feels like you intend it to be a dunk, but it's important to realize (and is pointed out in every thread on the topic) that income taxes are not the only advantage/disadvantage that certain markets have, and possibly not even the most meaningful one.

I agree with this but while it may not be the most meaningful one it is meaningful and more importantly, the NHL has control over it. They can adjust the cap and fix this problem. They can't change the weather or cost of living in the various cities.

 

[ShootIt]

Yea, it's definitely the taxes and not GM's handing out bloated contracts to RFAs, or paying market value for a center when they already had a #1 center.

 

[LOFIN]

Pretty minor and insignificant issue that fans want to make into a big and meaningful issue. Most of the no state tax markets are also currently highly desirable markets for reasons beyond that.

Yeah, because the teams are good.

The no-tax "advantage" did f*** all for Florida for 20 years, and now everyone is up in arms about it.