CokenoPepsi
Registered User
- Oct 28, 2016
- 5,405
- 2,785
Sidney Crosby with all his barely makes a million a year off them.
The angle is being overplayd
Should the NHL salary cap adjust for local income tax?
- Thread starter jbeck5
- Start date
- Status
Sidney Crosby with all his barely makes a million a year off them.
The angle is being overplayd
ScaredStreit
Registered User
How about Americans who play in Canada and have to pay double taxes? Should the cap keep that in mind? The cap is fine the way it is.
LightningStorm
Lightning/Mets/Vikings
I'm laughing at the fact that fans of teams in NY, LA, and Toronto are complaining about unfair market advantages. That right there is the definition of irony.
ottawa
Avatar of the Year*
Cost of living will never make up for tax differences between Florida/Texas and Canadian provinces.
Nice try.
Except your last post was completely unrelated. You were mentioning endorsements which have nothing to do with the topic
Kucherov is making 650k a year more than Tavares even though he signed for less than 1.5mil per year. that's crazy.
Is that in US dollars for both? Also players pay tax in the city they play in, not just their home state or province. So every player in the NHL pays both Toronto and Florida state taxes, it's just a matter of how many times.
The reason this topic exists is because people think it’s unfair lower taxed markets can offer higher take home pay. It’s releveant that most markets with the highest tax are also the same places that will have the best endorsement opportunities.
If a player is making a decision on where to play, he’s going to consider the total package, and does anyone actually think that Tavares’s total income at the end of next year will be less than if he’d played in Tampa?
I’m not sure I buy the argument that this benefits big market teams that much.
The cap would be based around after tax retention. To make it easy, lets just say the cap is 50m of after tax retention. A player in Florida and a player in Toronto will both bring home 5M after taxes. The salary is adjusted in each city to properly give them the cash owed. So for example, a player in Toronto is texhnically earning let's say 9M while the player in Florida is getting around 7M but they both take home the same 5M cash. If that same player is traded to Florida then the “employment income” would decrease to 7M, but he still makes the same 5M and that counts as 5M on the cap.
Everyone hypothetically keeps the advantage when it comes what they have to pay players, just the basis for calculating the cap is different.
Do I think this is the best option? Really idk. I think its impossible to make the cap based on after tax earnings because every play with have his own tax accountant doing his stuff specifically. It really is too complicated of an issue to just discuss in 30 minutes. I’d argue most CPAs specializing in tax wouldn’t even want to try and explain the different possibilities just due to the fact they could easily get themselves caught up in the tax act/international tax laws/specific planning options for very unusual clients. Not going to run the risk of not looking compotent online because someone was able to catch a loop in their discussion of tax law.
The cap would be based around after tax retention. To make it easy, lets just say the cap is 50m of after tax retention. A player in Florida and a player in Toronto will both bring home 5M after taxes. The salary is adjusted in each city to properly give them the cash owed. So for example, a player in Toronto is texhnically earning let's say 9M while the player in Florida is getting around 7M but they both take home the same 5M cash. If that same player is traded to Florida then the “employment income” would decrease to 7M, but he still makes the same 5M and that counts as 5M on the cap.
Everyone hypothetically keeps the advantage when it comes what they have to pay players, just the basis for calculating the cap is different.
Do I think this is the best option? Really idk. I think its impossible to make the cap based on after tax earnings because every play with have his own tax accountant doing his stuff specifically. It really is too complicated of an issue to just discuss in 30 minutes. I’d argue most CPAs specializing in tax wouldn’t even want to try and explain the different possibilities just due to the fact they could easily get themselves caught up in the tax act/international tax laws/specific planning options for very unusual clients. Not going to run the risk of not looking compotent online because someone was able to catch a loop in their discussion of tax law.
I don’t buy the argument that the tax rate benefits the low tax markets that much. We just haven’t seen a flood of UFA’s to Tennessee, Florida, and Texas.
Yours is the best idea I’ve come up with too, but I don’t think it’s remotely viable. Income taxes are based on so many personal factors. You’d have to standardize a rate (we’ll pay you x+(x*y%), x is the cap hit, y varies by market). But the rate would have to change yearly based on changes to tax law and your away games. And I’m sure it wouldn’t take long for individual market rates to be challenged by the NHLPA. It’s a whole bunch of red tape and cost and the benefit is only received by a handful of teams. They’d never get the votes.
I feel like a broken record here, but luxury tax is the far easier solution here. I don’t think the owners want that either. I don’t think they much care about any of this.
To add to this too, Im not sure what the specifics of a NHL contract are but I would imagine most players are being paid to some sort of business they have established for paper transaction purposes. Services provided via hockey, expenses being paid (agents etc..) which just complicates this whole topic even more.
Deegee
Registered User
I'm not sure what a luxury tax solves as you'd have Toronto, NYR, and maybe Detroit outspending everyone else. It would be like when the Ave's and Wings used to have monster payrolls in the 90's. Terrible time if you goal is league parity.
The owners fought for a hard cap to have cost certainty. The parity the league enjoys was just a nice side effect to win over fans.
The good news is for those vocal fans of larger market teams, sometime tells me the NYR and Leafs spend more on hockey operations than the Panthers or Coyotes do, so there is already a huge advantage over other markets.
Obviously, I’d be cool with a return to the 90’s, but that’s not the point. This whole conversation is effectively about allowing large market teams to spend more money. Alterations to the cap or contracts based on tax rates would be pretty much impossible. A luxury tax would be at least in the realm of possibility. I don’t think it’s actually going to happen either. But if getting large (high tax) markets more money to spend was my goal, that’s the cause I’d champion.
stampedingviking
Registered User
stampedingviking
Registered User
Canadian teams' players also benefit from the exchange rate. Should that be taken into account? Back office spending, take into account? Bigger endorsements in certain areas, take into account?
ManofSteel55
Registered User
Won't make up for it, but the point is that it will never be a 100% even playing field.
snag
Registered User
- Feb 22, 2014
- 9,955
- 11,221
And how does the exchange rate benefit them when the buying power of the CDN dollar is less?
Beezeral
Registered User
- Mar 1, 2010
- 10,029
- 5,224
snag
Registered User
- Feb 22, 2014
- 9,955
- 11,221
Beezeral
Registered User
- Mar 1, 2010
- 10,029
- 5,224
no, but I have read the articles that show exactly how the players get the benefit of being paid in USD. It's a well established principle.
snag
Registered User
- Feb 22, 2014
- 9,955
- 11,221
Yeah....they do benefit in many ways. But I am not certain we are looking at it the same.
Last edited:
snag
Registered User
- Feb 22, 2014
- 9,955
- 11,221
- Jun 14, 2016
- 1,766
- 7,090
One thing a lot of people on here don't understand is just how complicated it would be to adjust for tax.
1) The Jock tax on its own would be a pain to figure out
2) Property tax - do property taxes on primary residence factor in? second residence? vehicles?
3) does sales tax factor in? between 2.9 and 7.25% in the US
4) What about other sources of income (i.e. investments and endorsements) how do you separate the taxes from that from the taxes from salary?
5) what about deductions (for example charity) can a player be had at a lower cap hit because he is more charitable?
6) Tax rates for all these things change depending on legislation from year to year
If they were to go through all the trouble to figure that out fairly (spoiler #1 they won't #2 they can't) wouldn't they then have to adjust for other monetary things:
1) cost of living
2) USD vs CAD
3) Taxes pay for services (at least they are supposed to) those need to be factored in too
Why stop there we can make this even more fair
1) Western conference teams get more cap because of the travel
2) Big cities lose cap because some players would prefer to play/ live in a big city
3) coastal cities lose cap
4) Canadian city's lose cap because players want to play for their home team
5) Canadian cities gain cap because its cold
6) Cities more likely to provide significant endorsements lose cap
We could go on all day
1) The Jock tax on its own would be a pain to figure out
2) Property tax - do property taxes on primary residence factor in? second residence? vehicles?
3) does sales tax factor in? between 2.9 and 7.25% in the US
4) What about other sources of income (i.e. investments and endorsements) how do you separate the taxes from that from the taxes from salary?
5) what about deductions (for example charity) can a player be had at a lower cap hit because he is more charitable?
6) Tax rates for all these things change depending on legislation from year to year
If they were to go through all the trouble to figure that out fairly (spoiler #1 they won't #2 they can't) wouldn't they then have to adjust for other monetary things:
1) cost of living
2) USD vs CAD
3) Taxes pay for services (at least they are supposed to) those need to be factored in too
Why stop there we can make this even more fair
1) Western conference teams get more cap because of the travel
2) Big cities lose cap because some players would prefer to play/ live in a big city
3) coastal cities lose cap
4) Canadian city's lose cap because players want to play for their home team
5) Canadian cities gain cap because its cold
6) Cities more likely to provide significant endorsements lose cap
We could go on all day
wintersej
Registered User
^^^ I think teams that are winning should have less cap since players will sign there for cheaper.
MDCSL
Registered User
True, I think it’s fine the way it is just coming up with ideas since people seem to think income tax is unfair. How about keep everything the same and teams are allowed to reimburse players their state/provincal income tax then?
Something to consider:
Player A makes $1m taxed at 40% for a take home of $600k
Player B makes $1m taxed at 30% for a take home of $700k
You can’t write the IRS a check for $100k on behalf of player A and call it even. In their eyes, he now makes $1.1m. They want 40% of that. To get him to $700k, you’ve got to pay him $1.167m. That isn’t a huge deal. It’s just to show that even the simplest looking part of this is more complex than it seems.
Plus, taxes are never, ever as simple as that example. They are extremely individualized. Reimbursing for taxes would reward poor tax planners and punish good tax planners. Screw itemizing if the league is going to cut me a check regardless.
It’d have to be standardized, but as I said earlier, it would take the PA’s attorneys 2 hot seconds to challenge the rates. And why wouldn’t you include property and sales tax? Places with low income tax usually make up for it with higher taxes elsewhere. Tennessee has one of the highest sales tax rates in the country. Texas has some of the highest property tax rates in the country. Those are taxes too. Why wouldn’t they count? What about the exchange rate/the buying power of a dollar in each market? And it just opens the door to a million other little things that could be adjusted for.
It’s just too much to deal with.
Last edited:
- Status
