Should the NHL salary cap adjust for local income tax?

[Semantics]

The problem is the tax rates can change at any time, whereas NHL contracts last up to 8 years. You could set a different conversion rate per team every year, but that sounds like an accounting and legal nightmare for the teams. The tax laws are also so complicated and full of loopholes that I'm not even sure how one could create a sound legal framework for that type of contract.

People also can have wildly different personal tax situations. A player making minimum salary is going to have a smaller tax rate than a $10M player. Some players might have huge deductions, then what? They may be incentivized to sign in places with high tax rates if they can take advantage of deductions to net more than they would elsewhere. There are ramifications for things like mortgages, donations to charity, or side businesses/investments.

I think you'd just end up where players prefer still certain markets, just different markets and for different reasons, and having added a shitload of complexity and legal exposure to how the league is run.

tl;dr - Sounds good, doesn't work.

 

[Crede777]

Player taxes are determined by much more than simply what team they play for...

While players do have to pay a state/province tax in their home state/province, they also get taxed for "duty days" spent in each jurisdiction provided that jurisdiction doesn't have tax reciprocity with their home state or province.

For instance, if I played for the Tampa Bay Lightning but spent 6 days in California playing against the Kings, Ducks, and Sharks, I'm going to have to pay California income tax for what I made during those 10 days.

Of course, that's a very simplified account of what actually happens. But it can be complicated.

Pro Athlete Tax Returns Illustrate Complexities of U.S. Tax Code

 

[WTFMAN99]

It's cute that Habs/Leafs want to pretend that taxes are the reason players sign with other teams instead. The California and NY teams have high tax rates as well and don't seem to have problems attracting players/ free agents. I wonder why that is?

That said, they will never do this anyways because taxation rates are variable. No team/owner is going to go for any plan that means a huge expense like salary is not fixed a expense.

If you're going to be taxed a lot, you better be getting some good weather too. At least California satisfies that.

 

[Perfect_Drug]

Something Winny and Toronto figured out that the rest of the Canadian teams dont get:

Dont overhaul roster year after year. Young players will mature and get better over time.


UFA's rarely seem to be the straws that stir the drinks on cup winning teams.

Most UFA's are terrible signings.

 

[aufheben]

Yes.

 

[Not Sure]

Taxes are a scapegoat. Media brings it up every so often to point their finger and say "well that's why player x wont sign in city z". It's easier then admitting overzealous media and fans may do more to push those players from coming to play for their favorite teams. I'm sure taxes come into the equation, but not to the extent it's made out to be. It's more likely weather and being able to raise your family away from public view are far more important. Taxes matter more to you and I than they do to multimillionaires, otherwise California and NY would be desolate wastelands where no one with two pennies to rub together would live.

This issue is raised more by fans of Toronto and Montreal than anyone else it seems. It's just unfathomable that players wouldn't want to go there to some fans. The same fans that gloat about how the endorsement deals players could get playing in one of those two cities would pad their salaries more than any other team could offer. Seems a bit hypocritical to me.

 

[mouser]

If the never ending pursuit of "fairness" is the objective, why not have caps on coaching staff salaries? Front offices? Scouting staffs? Training staffs?

 

[IamNotADancer]

Then what about cost of living difference?

Vancouver, Toronto, New York, are a fair bit more expensive places to live in than say Buffalo.

As a player you are not forced to live within the direct vicinity of those cities. There is a difference between living in New Jersey and living in Manhattan.

I doubt most players live in downtown anyway.

 

[Eisen]

We could go well beyond taxes.
We use economics to actually gain parity.

I mean I make video games for a living, and in all competitive video games, we balance the crap out of the systems using analytical data and feedback, getting the most mathematically accurate balancing based on all the data we have.

Are there under-served markets incapable of attracting UFAs?
How can the NHL leverage economics to get teams stuck in the basement faster?

What about tweaking things like, adding lottery balls to teams who have not been in the playoffs, or giving them extra cap space to play with?


I know some of you will think this is silly as hell, but we could put AI, in charge of the micro-tweaking based on all statistical data, or create algorithms for everything to ensure perfectly balanced playing field between teams.

Wouldn't that negate the certainty that contracts would be paid?

 

[Howboutthempanthers]

No.
And free agent signings are overrated as hell anyway. Plus I don't see any big free agents that come free that much to distinguish that this is a big deal or not. Players re-signing with the team they are drafted is not another team losing out on free agents. And are we going to adjust for every other "advantage" or disadvantage there are between cities too?

If the never ending pursuit of "fairness" is the objective, why not have caps on coaching staff salaries? Front offices? Scouting staffs? Training staffs?

Plus what he said.

 

[Vancouver Canucks]

No

Yes.

 

[Perfect_Drug]

Tax rates conversion can be covered by escrow.

This is a solvable issue if people decide its actually an issue.

Wouldn't that negate the certainty that contracts would be paid?

Huh? Howso?

 

[Spirit of 67]

Ya, I think we should do it.

While we're at it, we'll have a weather adjustment. And adjustment for players playing in Canada and receiving US dollars. Cost of living adjustment. Health care adjustment. Traffic adjustment. I mean, look at DC. Traffic is so bad, TJ has to ride the Tube. He should be complensated.
Ottawa players should probably be compensated for the extra gas to get out to Kanata. Whereas Leafs players can literally not have to go outside to get to their rink. We need to take into account all of these things.

 

[Funk21]

As a fan of a team in a high tax jurisdiction, Ontario. I do believe teams located in States like Florida or Arizona have an unfair advantage to sign players at lower AAV.

This nonsense that what is next do we take into consideration living in expensive markets (NY, LA, Toronto, etc) vs. smaller markets is just ridiculous.

A level playing field in after tax earnings is a fair system because it then falls on players to determine where they want to play based on these factors:

• How likely is the team I sign for going to win;
• How is the quality of life in the city.

It’s time for the NHL to be progressive in their thinking. The put the hard cap in to prevent the haves like Toronto, NY, MTL, etc from spending 200 million a year so we could have a level playing field. This would be the next step.

 

[LeafFever]

Taxes are a scapegoat. Media brings it up every so often to point their finger and say "well that's why player x wont sign in city z". It's easier then admitting overzealous media and fans may do more to push those players from coming to play for their favorite teams. I'm sure taxes come into the equation, but not to the extent it's made out to be. It's more likely weather and being able to raise your family away from public view are far more important. Taxes matter more to you and I than they do to multimillionaires, otherwise California and NY would be desolate wastelands where no one with two pennies to rub together would live.

This issue is raised more by fans of Toronto and Montreal than anyone else it seems. It's just unfathomable that players wouldn't want to go there to some fans. The same fans that gloat about how the endorsement deals players could get playing in one of those two cities would pad their salaries more than any other team could offer. Seems a bit hypocritical to me.

The media never says that. They are brining it up because it does make a big difference in the actual contract. Same reason fans (All fans, not just Habs and Leaf fans) bring it up on here.

 

[tucker3434]

No, certain markets will always have certain advantages or disadvantages. That’s just part of it. It’ll never be perfectly fair.

 

[Stej]

We could go well beyond taxes.
We use economics to actually gain parity.

I mean I make video games for a living, and in all competitive video games, we balance the crap out of the systems using analytical data and feedback, getting the most mathematically accurate balancing based on all the data we have.

Are there under-served markets incapable of attracting UFAs?
How can the NHL leverage economics to get teams stuck in the basement faster?

What about tweaking things like, adding lottery balls to teams who have not been in the playoffs, or giving them extra cap space to play with?


I know some of you will think this is silly as hell, but we could put AI, in charge of the micro-tweaking based on all statistical data, or create algorithms for everything to ensure perfectly balanced playing field between teams.

Ideas like this terrify me. Nothing will sink humanity faster than removing all incentive to try hard because an authoritative black box AI program will swoop in and iron out any inconsistencies in outcome. Bravo!

What’s that you say, management team A worked twice as hard as management team B to build a sustainable winner? Whelp, the only logical conclusion to draw is that management team B should be rewarded with more draft picks! \sarcasm

As for the OP, yes, levelize the playing field by ironing out the income tax kinks.

And if your inclination is to jump on me for being inconsistent, please think harder about what I’ve just said.

I don’t agree with Jordan Peterson on everything, but I agree with his thoughts on equality of opportunity versus equality of outcome. They are very different things.

 

[Scott Malkinson]

If Arizona, Florida and Tampa were located in high tax states, this would have already been done.

 

[LeafFever]

If Arizona, Florida and Tampa were located in high tax states, this would have already been done.

I agree.
The NHl has gone overboard helping their non-traditional expansion teams.

 

[Buff15Sabres]

The problem is the tax rates can change at any time, whereas NHL contracts last up to 8 years. You could set a different conversion rate per team every year, but that sounds like an accounting and legal nightmare for the teams. The tax laws are also so complicated and full of loopholes that I'm not even sure how one could create a sound legal framework for that type of contract.

People also can have wildly different personal tax situations. A player making minimum salary is going to have a smaller tax rate than a $10M player. Some players might have huge deductions, then what? They may be incentivized to sign in places with high tax rates if they can take advantage of deductions to net more than they would elsewhere. There are ramifications for things like mortgages, donations to charity, or side businesses/investments.

I think you'd just end up where players prefer still certain markets, just different markets and for different reasons, and having added a ****load of complexity and legal exposure to how the league is run.

tl;dr - Sounds good, doesn't work.

This post isn't getting enough attention. If we look at each players individual tax returns I'm sure we'd see some players in high tax states paying LESS in taxes than players in low tax states. When you're making millions and have a good accountant you can do some pretty wild things with deductions.

The people that want to have the NHL adjust salary cap for local tax are probably the same people that would decline a promotion b/c it puts them in a higher tax bracket.

 

[glovesave_35]

Oh cool, this one again.

 

[tucker3434]

This post isn't getting enough attention. If we look at each players individual tax returns I'm sure we'd see some players in high tax states paying LESS in taxes than players in low tax states. When you're making millions and have a good accountant you can do some pretty wild things with deductions.

The people that want to have the NHL adjust salary cap for local tax are probably the same people that would decline a promotion b/c it puts them in a higher tax bracket.

I can’t believe how many smart people I hear say this or some similar variant.

 

[Mayor Bee]

If Arizona, Florida and Tampa were located in high tax states, this would have already been done.

Oh yeah, I mean, look at all the high-profile free agents that those three teams have signed. There's....uhhh....Derek MacKenzie.

 

[Armourboy]

Ya, I think we should do it.

While we're at it, we'll have a weather adjustment. And adjustment for players playing in Canada and receiving US dollars. Cost of living adjustment. Health care adjustment. Traffic adjustment. I mean, look at DC. Traffic is so bad, TJ has to ride the Tube. He should be complensated.
Ottawa players should probably be compensated for the extra gas to get out to Kanata. Whereas Leafs players can literally not have to go outside to get to their rink. We need to take into account all of these things.

Dont forget sales tax, property tax, personal property tax, license and registration, and cost of insurance on vehicles and houses.

While we are at it, places like Dallas, Nashville, and St. Louis should get compensation for dealing with tornadoes.

Oh how about an adjustment because players are from Canada and the NE mostly want to play in Canada and the NE so its harder for Arizona and Florida teams to sign UFA's.

The NHL could adjust the cap to be based on different numbers, but the point is someone will always have something to complain about that they see as not being fair.

 

[Filatov2Kovalev2Bonk]

No. Just create a luxury cap/tax so teams with lots of money can be unrestrained by the cap, with a gradual penalty for overspending.