Salary Cap (Taxes)

[Henkka]

income taxes are but one of many such factors that they consider. Unless the league is going to account for every single one of those (including property taxes, sales taxes, nightlife, weather, quality of local services, proximity to players’ hometowns, etc.

Could someone do a study about this?

What is the best place to play/live, when considering everything. Best weather, most money after taxes, competitive team etc.

 

[DistantThunderRep]

Could someone do a study about this?

What is the best place to play/live, when considering everything. Best weather, most money after taxes, competitive team etc.

That's subjective and not quantifiable. Like one person may say taxes aren't as important but being close to family is. Or one place has better schools for the kids and more family oriented. One may prefer cold weather over warm. Prefer a blue state over red. It's just impossible to narrow something down. You can however look at the raw numbers without context and base something off of that. But that would be impossible since other places will argue different points.

 

[AndreRoy]

Could someone do a study about this?

What is the best place to play/live, when considering everything. Best weather, most money after taxes, competitive team etc.

One could, but the problem is different people will weigh each of those factors differently when making their decisions. Some people like to surf while others like to snowboard. Some like an urban lifestyle while others want wide open spaces. Unmarried players might enjoy the crazy nightlife while those with families may prefer a more peaceful community with good schools for their kids. Young players not looking to settle down aren’t going to care as much about property taxes as older players looking for a place they can see themselves retiring to. Some people want their name on the Cup while others want the biggest paycheck they can get. So you could make a generic ranking but it’s going to reflect the bias inherent in how the weighting is determined.

 

[stator]

I don't know if I'd call it insignificant. Let's say you signed an $10mx8 contract with one of the three California teams, and your brother signs the same deal with Las Vegas. California's tax rate for that income is 12.3%. So for the duration of the contract, home games is $40m. 12.3% of income taxes is $4.92m. Whereas your brother's same $40m of home games in Nevada's income tax rate of 0% is $0m paid to the state.

I don't know about you guys, but in my household, nearly $5m is far from being insignificant.

Of course there are other state taxes to figure in with the two big ones being property and sales taxes. In sales tax, California has the highest state rate in the country. There's no real offset with property taxes for California due to being one of the higher average home price in the country.

So that $5m is pretty darn significant to me.

 

[Krewe]

I don't know if I'd call it insignificant. Let's say you signed an $10mx8 contract with one of the three California teams, and your brother signs the same deal with Las Vegas. California's tax rate for that income is 12.3%. So for the duration of the contract, home games is $40m. 12.3% of income taxes is $4.92m. Whereas your brother's same $40m of home games in Nevada's income tax rate of 0% is $0m paid to the state.

I don't know about you guys, but in my household, nearly $5m is far from being insignificant.

Of course there are other state taxes to figure in with the two big ones being property and sales taxes. In sales tax, California has the highest state rate in the country. There's no real offset with property taxes for California due to being one of the higher average home price in the country.

So that $5m is pretty darn significant to me.

Ugh don't remind me. Whenever I go home to Florida I am reminded just how much more expensive it is in the Bay Area. Property tax % may be lower (barely), but when your property is valued a ton higher, that's a hollow victory.

 

[Beukeboom Fan]

I don't know if I'd call it insignificant. Let's say you signed an $10mx8 contract with one of the three California teams, and your brother signs the same deal with Las Vegas. California's tax rate for that income is 12.3%. So for the duration of the contract, home games is $40m. 12.3% of income taxes is $4.92m. Whereas your brother's same $40m of home games in Nevada's income tax rate of 0% is $0m paid to the state.

I don't know about you guys, but in my household, nearly $5m is far from being insignificant.

Of course there are other state taxes to figure in with the two big ones being property and sales taxes. In sales tax, California has the highest state rate in the country. There's no real offset with property taxes for California due to being one of the higher average home price in the country.

So that $5m is pretty darn significant to me.

Stator, it isn't that simple. NHL players pay state tax on their game checks in the municipalities where the games are played. So when the brothers play in SJ they both are paying CA income tax on those earnings.

Obviously the LV player gets to play more games in Nevada, so he would pay less state tax than his CA brother, but you can't just take the difference in the tax rates to calculate the impact.

 

[triggrman]

I don't know if I'd call it insignificant. Let's say you signed an $10mx8 contract with one of the three California teams, and your brother signs the same deal with Las Vegas. California's tax rate for that income is 12.3%. So for the duration of the contract, home games is $40m. 12.3% of income taxes is $4.92m. Whereas your brother's same $40m of home games in Nevada's income tax rate of 0% is $0m paid to the state.

I don't know about you guys, but in my household, nearly $5m is far from being insignificant.

Of course there are other state taxes to figure in with the two big ones being property and sales taxes. In sales tax, California has the highest state rate in the country. There's no real offset with property taxes for California due to being one of the higher average home price in the country.

So that $5m is pretty darn significant to me.

How much of the $5m gets to be a deduction on your Federal taxes, all right?

 

[WesMcCauley]

Just curious if someone can explain salaries and how they pertain to the salary cap regarding players in Toronto vs say TB.

Read somewhere where all players are paid in US dollars but because of the higher taxes in Canada are we not at a disadvantage when signing players.

I’m a Leaf fan and not crazy about the Marner deal nor Matthews. But are we paying higher salaries to justify the taxes. If so how fair can that be in a salary cap world?

It has some impact but there are a lot more to it... If you make 5 million a year you will end up with anything between 2,4m to 3m depending on where you live.
Teams located in Canada, California and NY have it worst. And thats before you account for cost of living in a place like Manhattan for NYR players.
Canadian teams complaining about it is silly, California teams have it just as bad and LA won multiple times. Sharks, Anaheim and NYR have all been very consistent playoff teams. Funny how we very rarely hear fans of NY or California teams complaining about this compared to fans of teams in Canada.

If you are paid a lot of your salary in signing bonuses you can get away with a lot less taxes when you play in Canada by being a US resident (just like Matthews has done).
Auston Matthews Shoots and Scores Tax Savings | Crowe Soberman

 

[WesMcCauley]

This isn’t true. A Maple Leafs player still gets taxed in Canada for games they play in the US. The jock tax is an additional layer of tax. When you are a resident of a state with no state income tax, the jock tax will increase your effective tax rate because you will be required to pay the jock tax for your away games. For a Canadian resident they would still pay the jock tax and it would reduce the amount of tax they paid in Canada, but the tax reduction (foreign tax credit) would be limited to the amount of jock tax they paid. At the end of the day an Ontario resident will still pay 53% tax regardless of how many away games they play in the US.

They will but Matthews saves a ton of money by being a US resident and getting most of his $ as a signing bonus which all of their top guys have gotten. I wouldnt be surprised if Tavares still is a US resident for the same reason.
Auston Matthews Shoots and Scores Tax Savings | Crowe Soberman
John Tavares Could Save Nearly $12 Million In Taxes On His New Contract

 

[DistantThunderRep]

I don't know if I'd call it insignificant. Let's say you signed an $10mx8 contract with one of the three California teams, and your brother signs the same deal with Las Vegas. California's tax rate for that income is 12.3%. So for the duration of the contract, home games is $40m. 12.3% of income taxes is $4.92m. Whereas your brother's same $40m of home games in Nevada's income tax rate of 0% is $0m paid to the state.

I don't know about you guys, but in my household, nearly $5m is far from being insignificant.

Of course there are other state taxes to figure in with the two big ones being property and sales taxes. In sales tax, California has the highest state rate in the country. There's no real offset with property taxes for California due to being one of the higher average home price in the country.

So that $5m is pretty darn significant to me.

This is not how it works at all...and the fact that so many people on a base level think this is how it works is the problem. No research done, but because the Toronto Sports Network pushed this news out like a freight train, this has some how become fact even though it's wrong.

Edit: Let's take this incorrect assessments numbers and actually look at what the AAV difference would be over the 8 years....625k a year. that is 1/3 the BS that the Toronto Sports Network and their Propaganda Spinners say. If you go by their numbers, the difference would be 1.9-2.0 million a year.

 

[North Cole]

Stator, it isn't that simple. NHL players pay state tax on their game checks in the municipalities where the games are played. So when the brothers play in SJ they both are paying CA income tax on those earnings.

Obviously the LV player gets to play more games in Nevada, so he would pay less state tax than his CA brother, but you can't just take the difference in the tax rates to calculate the impact.

Depends also on the balance between signing bonus and game pay. Higher the weighting of signing bonus, the larger the disparity in tax between the players. It's not 5m like it he claims, but it's closer to than to being even.

 

[Beukeboom Fan]

Depends also on the balance between signing bonus and game pay. Higher the weighting of signing bonus, the larger the disparity in tax between the players. It's not 5m like it he claims, but it's closer to than to being even.

I 100% agree there is a difference, just that is way to complicated to say (CA tax rate - NV tax rate) x salary. Also, there are a lot of specific situations that can't easily be altered (Matthews being a US citizen from a state with no income tax for example) that people project on others when it isn't that simple.

 

[North Cole]

I 100% agree there is a difference, just that is way to complicated to say (CA tax rate - NV tax rate) x salary. Also, there are a lot of specific situations that can't easily be altered (Matthews being a US citizen from a state with no income tax for example) that people project on others when it isn't that simple.

Agreed. I dont think anyone can even speculate because there is so much private information that we dont have access to (nor should we) which affects the situation. For all we know "50 Goal Matthews LLC" enters into a contract with the Leafs for hockey related services and it's place of incorporation is Barbados, then a whole bunch of tax treaty stuff happens and they pay less than we know. Doubt these big name guys are singing contracts personally, I'd be shocked if they didnt funnel stuff through a legal entity which they own 100% of.

Never seen a players t4 or pay stub, I'm curious if they are "employees" or "contractors" and what type of source deductions are done by the teams.

 

[kladorf2005]

Is this topic ever going to die? I'd be willing to bet we have double digit threads since June on this dumb topic

Also, I have a dumb counterpoint to this dumb topic: Canadians have universal healthcare. Did OP (and most of Leafs Nation) factor that into their math when determining household income and blah blah blah

 

[JianYang]

You can come up with any system, and there will always be certain teams that will come out with a perceived advantage. Thats just the nature of the beast.

The real reason for the salary cap, and revenue sharing is to give the league the best chance to sustain the number of teams it has in the league.

Therefore, there is no real incentive for the league to change anything, as contraction is not, and has not been a threat for a very long time, if ever.

 

[I am Canadian]

It's crazy how you don't hear these discussions in the NFL or NHL. Hell, the biggest names in the NBA signed in California and NYC this offseason - yet nary a peep was made about going to OKC or Miami for the tax breaks.

Actually, Leonard would have made significantly less due to taxes staying in Toronto.

 

[I am Canadian]

All the people whining about taxes need to stop. Every team has the same limit on how much they can pay their players; how much the government takes from those players after they’re paid is none of the league’s concern. Players with the ability to do so choose where they will play based on a number of factors that vary from person to person; income taxes are but one of many such factors that they consider. Unless the league is going to account for every single one of those (including property taxes, sales taxes, nightlife, weather, quality of local services, proximity to players’ hometowns, etc.) they’re much better off doing what they’re doing now: making rules that apply to every team equally and ignoring things that are out of their control.

Tampa fan lol..

 

[AnCatDubh]

Agreed. I dont think anyone can even speculate because there is so much private information that we dont have access to (nor should we) which affects the situation. For all we know "50 Goal Matthews LLC" enters into a contract with the Leafs for hockey related services and it's place of incorporation is Barbados, then a whole bunch of tax treaty stuff happens and they pay less than we know. Doubt these big name guys are singing contracts personally, I'd be shocked if they didnt funnel stuff through a legal entity which they own 100% of.

Never seen a players t4 or pay stub, I'm curious if they are "employees" or "contractors" and what type of source deductions are done by the teams.

The are employees. T4/w2. They could use a Corp structure for their endorsements but not the salary/signing bonus

 

[New User Name]

What if they play in Toronto and live in Arizona?

They become the highest paid player in the NHL (after tax)

 

[New User Name]

As a Leafs fan and resident now of Ontario I do NOT want my taxes lowered. The benefits received by seniors, the disabled and less advantaged people as a result of additional taxes is far more important to me and society than the Leafs getting players signing "team friendly" contracts.

If fellow Leafs fans want to complain, look at Matthews contract. This year and next year he will receive over 30 million is signing bonuses. If it's true that signing bonuses are taxed at 15% for American residents playing in Canada then he and his agent royally f***ed the Leafs.

 

[mouser]

Actually, Leonard would have made significantly less due to taxes staying in Toronto.

Are you factoring a potential Retirement Compensation Agreement into that assessment?

 

[hmc1987]

So to sum it up, unless I am mistaken, only in one season a team from a tax heaven state won the Stanley cup...

So the myth that the poor Leafs are getting screwed by the taxes is just a myth.

Yeah the taxes didnt sign Marner and Matthews to $11m AAV deals. That was TML GM XD XD XD

With that being said same TML GM did masterful job with Kerfoot and getting Barrie for a year. Also, Nylanders deal is really not bad

 

[Legion34]

They will but Matthews saves a ton of money by being a US resident and getting most of his $ as a signing bonus which all of their top guys have gotten. I wouldnt be surprised if Tavares still is a US resident for the same reason.
Auston Matthews Shoots and Scores Tax Savings | Crowe Soberman
John Tavares Could Save Nearly $12 Million In Taxes On His New Contract

The athletic did a follow up study with an actual accountant for NHL players who argued that on a long term contract maximizing all loop holes a client of his could get it down to 42%.

Being a US resident isn’t as easy as people think In real life. You live here from September to April. Have endorsements and make millions here.

Tavares has a kid and a wife who works here.

The idea that the Canadian government just willingly gives up millions in revenue without a fight is insane

 

[Legion34]

As a Leafs fan and resident now of Ontario I do NOT want my taxes lowered. The benefits received by seniors, the disabled and less advantaged people as a result of additional taxes is far more important to me and society than the Leafs getting players signing "team friendly" contracts.

If fellow Leafs fans want to complain, look at Matthews contract. This year and next year he will receive over 30 million is signing bonuses. If it's true that signing bonuses are taxed at 15% for American residents playing in Canada then he and his agent royally ****ed the Leafs.

It doesn’t work like that in real life. He might get it down to 42% according to an NHL accountant and he runs a significant risk of back taxes.

 

[Legion34]

Is this topic ever going to die? I'd be willing to bet we have double digit threads since June on this dumb topic

Also, I have a dumb counterpoint to this dumb topic: Canadians have universal healthcare. Did OP (and most of Leafs Nation) factor that into their math when determining household income and blah blah blah

Does the NHL cap healthcare?

Leaf fans actually just paid 600 for a preseason game. And then that money goes to Arizona.

Would you pay for my meal? Why is this different?