Should the NHL salary cap adjust for local income tax?

[Butch 19]

I wasn't highlighting the point that he stayed in Tampa, rather that he signed there for $8.5M when other teams were probably ready to offer $11-12M on the free market. And remember that he signed only two days before free agency. It's good work by Yzerman as well, but I'm pretty sure the tax effect was taken into account when coming to that number, where an $8.5M offer from Tampa was the same as a $10M offer from Toronto, or something like that.

This thread will keep coming back as long as all the top UFAs don't sign with Toronto.

 

[Jetsetter]

Yes as it goes to a better leveling of the playing field.

 

[LivG]

Tennessee has some of the lowest utility costs in the country along with gasoline. It’s really not that simple. I looked at some Cost of living calculators and it’s no comparison Nashville has a vastly lower cost of living than most NHL cities.

FYI: The income tax is prohibited by the constitution in TN and it’s never affected any cost of living to balloon.

It's true my property taxes are so low my parents who lived in NJ thought my annual payment was monthly. I couldn't live on what I make here in Jersey. I actually made more up there but car insurance costs were killing me too.

 

[HolyGhost]

For me and me only, I do not think many of those in favour realise why there is a cap and why getting rid of it would be very bad for the league. You would go to maybe a 10 team league and you would have a huge difference between the havs and have nots. You would quickly see the leafs with 12 guys on 10 mill each and a few others on 8, the Rangers would also have a lot of guys over 8 to 10 a year. Red Wings would have 50 mill on their third line alone. Take away the cap and we would see a lot of fringe teams having the cheapest rosters they could. Get rid of the cap, get rid of the floor.

 

[Spazkat]

Last I checked Tavares is very interested in the Leafs. Marleau left a California team after 2 decades to join the Leafs last summer.
It is indeed very unfair the Habs/Leafs give the most in revenue sharing and get punished with taxes.

You are linking 2 completely unrelated things. WTF does taxation rate have to do with revenue sharing?

That said, TOR likes to link themselves with the Habs as "high tax rates" but the fact of the matter is that's not quite true. Yes, Montreal is the highest, but in between them and Toronto are (in order) LA, San Jose, Anaheim, NYR, Minnesota, Washington and NJD with TOR and OTT tied and Columbus only .3% behind them. It's just not this huge disadvantage you're making it out to be.

source: https://www.taxpayer.com/media/CTF-HomeIceDisadvantage.pdf

 

[Archangel]

While I am a working class slob, some of the people I work with are part of the 1% and in talking with them, I think some of us do not understand how the 1% stay the 1% when it comes to paying taxes if you have a good accountant and lawyer

 

[tucker3434]

Yes.

Otherwise it means effectively, that teams like Florida and Vegas without state tax have substantially more dollars to spend on FAs then teams like Toronto, Ottawa and Montreal. The salary cap system was meant to level the playing field; if you don't incorporate different tax rates then you are not doing this.

NHL needs to peg the base salary cap number (say $80million) to say just the US federal tax rate for the average player salary and then adjust the actual salary cap for each team based on the added state and provincial rates for teams because as it stands right now you have:

tax for players earning $3 million per season (rough NHL average salary): League high- 52.4% (Tor, OTT), Low- 38.14% (LV, FLA, TBL - there is no state income tax) That means the take home for a player with a cap hit of $3 million is really $1.42 million in Toronto or Ottawa vs $1.85 million in Vegas or Florida.

Tax for players with an $11 million per season cap hit (ie. Superstar caliber player range): League high- 53.22% (Tor, OTT), Low- 39.2% (LV, FLA, TBL)
That means the take home for a player with a cap hit of $3 million is really $5.14 million in Toronto or Ottawa vs $6.68 million in Vegas or Florida.


These are big differences in actual take homes. Across a roster it effectively means that teams in tax-free states effectively have around $10 million more in cap space to the teams in the most heavily taxed provinces or states. There is no way you can argue that this is not an enormous competitive advantage. A team in a state like Florida or Vegas (if the owner is willing to spend to the cap) can simply outspend everyone else... by a lot.







NOTE: grabbed these stats from The Hockey Guy who took the effort of doing this for all the teams by sorting though the Cap Friendly data.

That screws up trading, giving further advantage to high-tax cities as anybody that originally signed with a Florida or Dallas would be a bargain to a NYC or Toronto.

 

[Rusty Razor]

I've been a proponent of this for years. Make the cap a post tax cap. Teams in high tax markets spend more of their cap space to compensate. It's an imbalance.

Player and team agree to an amount made after taxes (but not including union dues, etc). That number is the same in any market. If the player moves, the new team doles out whatever it takes in that market to meet the number.

There was a time when players in Canada were paid in Canadian funds while players in the US were paid in US dollars. That changed. This should change too.

Your employer can't pay your taxes. It creates a loop where the tax payment becomes income and then taxes have to be paid on it. It could work simply for cap numbers (even if I don't agree with the idea), but if it comes to real world dollars it can't work.

 

[BLNY]

Your employer can't pay your taxes. It creates a loop where the tax payment becomes income and then taxes have to be paid on it. It could work simply for cap numbers (even if I don't agree with the idea), but if it comes to real world dollars it can't work.

You've misunderstood my comment. In no way am I saying that the employer pays the taxes. What I'm saying is that if player "Y" makes $3 million after taxes in Dallas and gets traded to Montreal, Montreal increases the player's gross salary to realize the same take home pay. The player still pays his own income tax. I think it's a reach to call it employer subsidized. They're simply paying their player more, like they would have to if they negotiated with the player in the first place.

The concept completely levels the playing field. Players who argue about taxation in Canada take home the same net income and that net income is what is counted against the cap. Simply put, $80 million goes a heck of a lot further in Dallas or Miami than in does in Montreal or Toronto.

 

[lifelonghockeyfan]

Pretty naive folks if they think hockey players pay taxes on the personal income tax. Most money is incorporated especially for the higher paid players . Players may pay taxes from where they reside not where they play half there games.
Wish sites hadn't published these meaningless tax rates as they spew really false information.

 

[Newsworthy]

No I think the cap and the way things are down tax wise is fair.

 

[Luigi Habs]

If you coubt the tax why don’t you also count living expenses?

I think it complicates things.

 

[McVespa99]

Yes if the league wants it to be fair.

 

[Butch 19]

Pretty naive folks if they think hockey players pay taxes on the personal income tax. Most money is incorporated especially for the higher paid players . Players may pay taxes from where they reside not where they play half there games.
Wish sites hadn't published these meaningless tax rates as they spew really false information.

But players also pay taxes based on were they play half of their games. They pay taxes on 82 games play each year - eg. every city they play in.

(not sure re playoffs since they do not get paid for playoff games - so I assume not taxes on PO hockey...?)

 

[Woodrow]

But players also pay taxes based on were they play half of their games. They pay taxes on 82 games play each year - eg. every city they play in.

(not sure re playoffs since they do not get paid for playoff games - so I assume not taxes on PO hockey...?)

Lots of players also have signing bonuses which may affect where that money is taxed as well. Adjusting the cap for taxes would be really complicated.

 

[Anglesmith]

I think it's a poorly thought out suggestion. Both because of negative unforeseen consequences it would cause, and because of failure to address the intended goal. The concept relies upon players accepting lower cap hits in cities with lower taxes, but ignores all of the other financial factors, such as cost of living, thus not really fixing the perceived problem. I don't believe players would adjust their negotiations in that manner, as a trade would quickly rob them of the "advantage" for which they would lower their demand. In addition, it would greatly affect the way trades work in the NHL, as teams in high-tax cities would have an extremely difficult time moving out bloated contracts compared to teams in low-tax cities.

 

[Mayor Bee]

I think it's a poorly thought out suggestion. Both because of negative unforeseen consequences it would cause, and because of failure to address the intended goal. The concept relies upon players accepting lower cap hits in cities with lower taxes, but ignores all of the other financial factors, such as cost of living, thus not really fixing the perceived problem. I don't believe players would adjust their negotiations in that manner, as a trade would quickly rob them of the "advantage" for which they would lower their demand. In addition, it would greatly affect the way trades work in the NHL, as teams in high-tax cities would have an extremely difficult time moving out bloated contracts compared to teams in low-tax cities.

Somehow I doubt that the proponents of this harebrained scheme care in the slightest about any of that.

 

[Shockmaster]

Somehow I doubt that the proponents of this harebrained scheme care in the slightest about any of that.

They don't. They just want the cap removed altogether so their teams can buy championships.

 

[Beezeral]

Counterpoint. The league should count endorsement contracts for players against the cap. Playing in a big market like Toronto makes it much more likely a player will get some kind of endorsement deal compared to players playing in small markets like Florida. Can’t allow big markets to have that unfair advantage over small ones.

See how dumb this is?

 

[King'sPawn]

As a fan of a team with high taxes and cost of living: no.

The cap is about cost certainty. Parity is a by-product and the current system doesn't have ridiculous overhead.

Agents/accountants can help negotiate the structure to make it ideal.

 

[Statto]

ne er mind, it’s been covered

 

[Sabresruletheschool]

My first thought was yes. But after thinking about it, why should the NHL change because some states don't know how to govern themselves? It's not Minnesota's fault that Cuomo is a shitty governer and taxes everyone to death so he can spend money on bullshit. Nope, if you have a team in a state with a shitty government, then suffer the consequence.

 

[Gnashville]

I guess Leafs fans and media can quit whining about the Tax advantages now!!!!

 

[Melrose Munch]

What is the point of the cap if guys are going to take discounts to play in big markets?

 

[ThirdManIn]

Do you have any idea how complicated this would be? Maybe fans should just realize that it isn't the tax rate that makes their team less desirable than another to a player. Besides, players are taxed at the rate of the place in which they play away games as it is. Are we going to adjust the salary cap for each team depending on their schedules, too?