It's counting the after-tax salary that's complex. Every player's tax profile is different.
Salary Cap: The three things ruining the NHL (Especially Canadian Teams)
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Golden_Jet
Registered User
- Sep 21, 2005
- 28,372
- 15,165
Still wouldn’t work, certain players get deductions others wouldn’t get, ie one example is jock taxes etc.
How do you set the following years salary cap, when you don’t even know what taxes players paid.
ULF_55
Moderator
IMO the government involvement in leveling the playing surface is a non-starter.
No one should want any government involvement in professional sports, ever.
The NHL and the Players Association should address the unequal playing field.
Leveling the surface really would require balancing the Cap per tax jurisdiction.
This is a real issue, not a perceived issue. One player just signed a contract that defers payment 10 years beyond his playing career and part of the reasoning was to get more of that money in his pocket while living in a low tax state. That was stated in the media when it was being discussed. Obviously, there are other tax avoidance steps every individual can take, but the inequity is real.
The solution is beyond my abilities, and likely most of the posters here, as it would take an understanding of every tax law for all the states and provinces, and from what I've read in the past, where games are played, where players are legal residences of, and more than I know.
I'm sure tax laws change over time, last time I moved during the middle of the year to a new location, my return was based on where I resided at the end of the year, and my previous residence was irrelevant. Now I was an employee not a contractor, although many of my co-workers over the decades have been contractors and not employees, and most were incorporated. Some in same province some in other provinces. They paid themselves out of their incorporated companies, which also paid for their own benefits. Different tax rules apply, although over the years the government tried to call them employees if they contracted at the same location for "too long."
All this is to suggest, determining a formula to reward/increase and punish/reduce teams to arrive at a fair and equal Floor and Ceiling makes sense to me.
So a player of Matthews / marner level.
Where do you find that balancing point?
Do you use average NHL salary?
Do you use median
Just spit-balling ...
No one should want any government involvement in professional sports, ever.
The NHL and the Players Association should address the unequal playing field.
Leveling the surface really would require balancing the Cap per tax jurisdiction.
This is a real issue, not a perceived issue. One player just signed a contract that defers payment 10 years beyond his playing career and part of the reasoning was to get more of that money in his pocket while living in a low tax state. That was stated in the media when it was being discussed. Obviously, there are other tax avoidance steps every individual can take, but the inequity is real.
The solution is beyond my abilities, and likely most of the posters here, as it would take an understanding of every tax law for all the states and provinces, and from what I've read in the past, where games are played, where players are legal residences of, and more than I know.
I'm sure tax laws change over time, last time I moved during the middle of the year to a new location, my return was based on where I resided at the end of the year, and my previous residence was irrelevant. Now I was an employee not a contractor, although many of my co-workers over the decades have been contractors and not employees, and most were incorporated. Some in same province some in other provinces. They paid themselves out of their incorporated companies, which also paid for their own benefits. Different tax rules apply, although over the years the government tried to call them employees if they contracted at the same location for "too long."
All this is to suggest, determining a formula to reward/increase and punish/reduce teams to arrive at a fair and equal Floor and Ceiling makes sense to me.
So a player of Matthews / marner level.
Where do you find that balancing point?
Do you use average NHL salary?
Do you use median
Just spit-balling ...
Attachments
Larcos_Unal
Registered Nurse
53% tax is absolutely wild lolIMO the government involvement in leveling the playing surface is a non-starter.
No one should want any government involvement in professional sports, ever.
The NHL and the Players Association should address the unequal playing field.
Leveling the surface really would require balancing the Cap per tax jurisdiction.
This is a real issue, not a perceived issue. One player just signed a contract that defers payment 10 years beyond his playing career and part of the reasoning was to get more of that money in his pocket while living in a low tax state. That was stated in the media when it was being discussed. Obviously, there are other tax avoidance steps every individual can take, but the inequity is real.
The solution is beyond my abilities, and likely most of the posters here, as it would take an understanding of every tax law for all the states and provinces, and from what I've read in the past, where games are played, where players are legal residences of, and more than I know.
I'm sure tax laws change over time, last time I moved during the middle of the year to a new location, my return was based on where I resided at the end of the year, and my previous residence was irrelevant. Now I was an employee not a contractor, although many of my co-workers over the decades have been contractors and not employees, and most were incorporated. Some in same province some in other provinces. They paid themselves out of their incorporated companies, which also paid for their own benefits. Different tax rules apply, although over the years the government tried to call them employees if they contracted at the same location for "too long."
All this is to suggest, determining a formula to reward/increase and punish/reduce teams to arrive at a fair and equal Floor and Ceiling makes sense to me.
So a player of Matthews / marner level.
View attachment 981477
Where do you find that balancing point?
Do you use average NHL salary?
View attachment 981476
Do you use median
View attachment 981475
Just spit-balling ...
Golden_Jet
Registered User
- Sep 21, 2005
- 28,372
- 15,165
Marner yes, Matthews pays less than the Dallas example, due to points you already mentioned.IMO the government involvement in leveling the playing surface is a non-starter.
No one should want any government involvement in professional sports, ever.
The NHL and the Players Association should address the unequal playing field.
Leveling the surface really would require balancing the Cap per tax jurisdiction.
This is a real issue, not a perceived issue. One player just signed a contract that defers payment 10 years beyond his playing career and part of the reasoning was to get more of that money in his pocket while living in a low tax state. That was stated in the media when it was being discussed. Obviously, there are other tax avoidance steps every individual can take, but the inequity is real.
The solution is beyond my abilities, and likely most of the posters here, as it would take an understanding of every tax law for all the states and provinces, and from what I've read in the past, where games are played, where players are legal residences of, and more than I know.
I'm sure tax laws change over time, last time I moved during the middle of the year to a new location, my return was based on where I resided at the end of the year, and my previous residence was irrelevant. Now I was an employee not a contractor, although many of my co-workers over the decades have been contractors and not employees, and most were incorporated. Some in same province some in other provinces. They paid themselves out of their incorporated companies, which also paid for their own benefits. Different tax rules apply, although over the years the government tried to call them employees if they contracted at the same location for "too long."
All this is to suggest, determining a formula to reward/increase and punish/reduce teams to arrive at a fair and equal Floor and Ceiling makes sense to me.
So a player of Matthews / marner level.
View attachment 981477
Where do you find that balancing point?
Do you use average NHL salary?
View attachment 981476
Do you use median
View attachment 981475
Just spit-balling ...
Dreakmur
Registered User
It would make planning much simpler for the teams, but it doesn’t really address any of these questions.
Golden_Jet
Registered User
- Sep 21, 2005
- 28,372
- 15,165
Not really.
Like just set the cap at 95mil and that number is after tax. Let’s say player X will need to pay 4mil tax in Toronto and 3mil tax in Utah if he takes home 8mil after tax.
The 8mil will charge under the cap and the tax will be paid by whichever teams that signs him.
As long as the teams are willing to pay all the income tax of the players. It is not a difficult concept.
Golden_Jet
Registered User
- Sep 21, 2005
- 28,372
- 15,165
Keep in mind, every player in US and Canada pay taxes to the state they play in. That’s a lot of different taxes to pay to all those different states, and a nightmare to keep track of for a team,
only 41 of those are home game @ULF_55 , so those tables shown earlier, wouldn’t be accurate, and then need to see where the other 41 are played.
Last edited:
Golden_Jet
Registered User
- Sep 21, 2005
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ULF_55
Moderator
Yes, as I said I doubt anyone here would know, however I bet we could determine it. Have to be based on each team and schedules, and that can change yearly. We know some teams and it's players will play a minimum of 41 games in a no income tax state. Whereas some teams will play a minimum of 41 games in the highest tax location.
It's just inputs and outputs and if you can write a program that drives a car in LA you can write a program to come up with a Cap equalizer.
Not sure it could ever be 100%, but it only has to be close, like officiating.
You could disregard individual players residence, as the goal isn't to arrive at a 100% to the cent formula, but to equalize the huge discrepancies.
Menzinger
Kessel4LadyByng
There's too many complicated variables impacting taxes to allow for them to be taking into account for the cap.
Like if a guy is a foreign national and has taxation obligations in multiple countries, signing bonuses vs salary ect. Trading players would become a nightmare....
Like if a guy is a foreign national and has taxation obligations in multiple countries, signing bonuses vs salary ect. Trading players would become a nightmare....
therealkoho
Him/Leaf/fan
Makes it a lot worse when the GM is a starry eyed fan-boy, who believes in his infallibility!
therealkoho
Him/Leaf/fan
Seeing as giving pro athletes (who make millions) special tax exemptions when people are struggling to make rent, let alone heat, light or groceries, would mean the end of the politicians career. So imco the tax angle is a non starter.
What might work although it still has holes is to eliminate the cap ceiling. That way, if the real wealthy teams want to spend 115m let them, cap floor must be strictly adhered to though. No more of filling out your cap number with 15m in dead contracts like the Yotes were getting away with.
What might work although it still has holes is to eliminate the cap ceiling. That way, if the real wealthy teams want to spend 115m let them, cap floor must be strictly adhered to though. No more of filling out your cap number with 15m in dead contracts like the Yotes were getting away with.
ULF_55
Moderator
Yeah, I wouldn't worry about anything except the taxation rates of the team location.
As I mention above, we know there are players who play at a minimum 41 games in the highest tax location and players who play a minimum 41 games in the lowest tax location.
I would suggest the Cap Adjustment Ratio would be for the teams, not the players.
Lowest tax teams (to make up a number) receive 6.055% less Cap than the unadjusted Cap, whereas the highest tax teams receive 6.055% more Cap. Proration between those upper and lower rates.
That would eliminate the advantage/disadvantage.
I am saying the teams will be responsible for paying income tax for players instead of the players. P
Ofcourse there will be difficulties. But once the system is set in place, it won’t be as difficult as first time around.
I am suggesting if teams are willing to pay the income tax for players, then teams like TB, Vegas… will no longer have the tax advantage.
Which should make it fair for all teams.
But doubt that would happen
That would be very complicated.
The amount of money a team pays for a player's income tax is itself a taxable benefit that is also subject to tax.
If the player has other sources of income, would the team pay taxes at the player's average tax rate or at the marginal rate?
If a player's is to get $1,000,000 net of taxes, then how much is the actual contract amount?
Who gets credit for any tax shelters, charitable donations, or investment losses that might reduce the player's tax burden?
What happens to the contract if a player gets traded to another tax jurisdiction, or moves their primary or secondary residence from one jurisdiction to another?
These are all questions that would affect each player's income tax liabilities. It's not like paying sales tax at a fixed percentage on the price of goods or services, because unlike sales tax, income tax takes into account the entire tax situation of the taxpayer.
What happens to a team's salary cap numbers when there are changes in the roster through trades, injuries, demotion and promotions? How easy would it be to calculate the salary cap number and the actual financial obligations of the franchise?
What happens if a contract has deferred income that won't be taxed until after the contract expires? It is not possible to know in advance which tax jurisdiction would apply, nor what the tax rates would be.
One of the main purposes of the salary cap is to give NHL franchises cost certainty. How on Earth would NHL teams ever achieve cost certainty in such an environment.
I've practiced law for nearly 40 years and have a masters degree in tax law. I can't even begin to imagine how such a facile, simplistic concept could ever work.
MK78
Registered User
- Apr 8, 2023
- 2,643
- 1,853
Nobody was complaining when Chicago and LA were winning multiple cups. Both very highly taxed states.
But in recent years yeah there have clearly been some deals made that seem to show the growing trend of players favouring no state tax teams rather than the high ones. Also players put the high tax teams on their no trade as well, since that can affect them as well especially while on a longer term deal.
I truly dont understand why a Canadian team hasnt won the cup in 30+ years. They've all been in the finals, some more than once except the Leafs of course.
ULF_55
Moderator
Interestingly, Kane was making $6.3mm against the Cap their last win.
The next year he was making $10.5mm against the Cap.
Ditto: Jonathan Toews
Now they're a bottom feeder.
I think the idea would be finding a better solution, not a perfect one.
Calculations based on take home pay would be crazy, and probably impossible. But adjusting team caps to alleviate headline tax rate impacts in some capacity might be manageable.
There would still be manipulation of the system, just quite a bit less.
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