What is the solution to balancing the salary cap with no tax states?

[KrisLetAngry]

1.) signing bonuses get paid in your local
Jurisdiction. So the stars are all getting taxed
At 37% instead of 55%

2.) nhl agents, players, coaches, GMs and accountants have repeatedly said it is an issue. You don’t get to decide it’s not.

Yep. If it wasn't true we wouldn't see the discounts we see.

 

[Turin]

It’s sort of ruining the league. Instead of NYR, Toronto, Boston, Detroit etc buying all the players it’s Florida, Vegas, Dallas, Tampa being the only trade and signing destinations.

It’s not unfixable it just happens to be Bettman’s wet dream. But if enough of the owners get annoyed after the 7th straight Cup from these teams they could do something about it.

 

[JianYang]

This has been brought up before but this is such a slippery slope. Some of those markets with this supposed disadvantage have more endorsement opportunities.

Some of those markets with the supposed disadvantage also are cash cows and have increased flexibility in the way they can structure contracts.

Besides, where do we stop with the equalization credits? Should there be a credit for cold weather cities? Should there be a credit for markets where players are more scrutinized and recognizable?

At the end of the day, you are trying to achieve some sort of equal that does not exist.

And where was this topic a decade ago when Chicago, LA and Boston won every cup from 2011 to 2015? The cap still existed.

 

[Voight]

The no state income tax thing is a non issue.

Nobody was signing with the Panthers, Bolts or Stars when they were basement dwellers. This is now only an advantage because all three of them are cup contenders and two of them are a recent winner.

 

[WarriorofTime]

The nhl is a cyclical league. The teams good now were all terrible 10-15 years ago and nobody was talking about state taxes.

 

[Golden_Jet]

It’s becoming a big problem that the NHL has to be worried about. The NHL’s smallest TV markets are able to spend in some cases 15%+ more than large market teams.

Between NY state tax and NY city tax, the rangers roster for the same exact salary takes home about 15% less than floridas roster.

Yet another thread on this topic, that gets the taxes wrong.
41 games for each team pay taxes in the state or province the game is played in.

 

[dirtydanglez]

dont. not everything has to be equal. how do you account for being a nicer city and having nice weather. how to you balance teams have a worse travel schedule or better facilities. sometime teams are going to have an small advantage.

 

[Chainshot]

Put all the forgone costs into a pot and redistribute the salary cap amongst the teams.

Simple. I like it.

 

[Fatass]

dont. not everything has to be equal. how do you account for being a nicer city and having nice weather. how to you balance teams have a worse travel schedule or better facilities. sometime teams are going to have an small advantage.

Yup. Add on that some markets, especially in Canada, the players make money with endorsing and advertising.

 

[Golden_Jet]

Make the salary cap based on net income. Problem solved.

Doesn’t solve anything, look at Matthews plays in a high tax province , but is near the top of the league in net income thanks to signing bonuses.

 

[LaffyTaffy13]

Yet another thread on this topic, that gets the taxes wrong.
41 games for each team pay taxes in the state or province the game is played in.

You should like at matthew tkachuk and barkov’s salary structure. 90% of it is paid out in signing bonus each season. Only $1mm is salary. Meaning 90% of their pay is not subject to state or city taxes

 

[the_fan]

Get rid of the salary cap. That’s the only solution. It’s not like salary cap has created parity in the NHL. We have the same teams making the final 4 almost every year, and good chance we have the same finals as last year and the same cup winner, with Florida making the finals 3 years in a row

 

[Golden_Jet]

Yup. Add on that some markets, especially in Canada, the players make money with endorsing and advertising.

True but also CDN teams are also at a disadvantage, due to paying salaries in US dollars, and taking in CDN dollars.

 

[sabremike]

Get rid of the salary cap. That’s the only solution. It’s not like salary cap has created parity in the NHL. We have the same teams making the final 4 almost every year, and good chance we have the same finals as last year and the same cup winner

Yes, we need a league where 90% of the teams are just feeder clubs for a handful of super clubs!

Brilliant!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[Monsieur Miz]

Wake up babe, new excuse for Canadian teams not winning cups just dropped.

 

[the_fan]

Yes, we need a league where 90% of the teams are just feeder clubs for a handful of super clubs!

Brilliant!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

And the difference would be what exactly? We have pretty much the same teams making the deepest run right now. Florida about to make the finals 3 years in a row

 

[Fatass]

And the difference would be what exactly? We have pretty much the same teams making the deepest run right now. Florida about to make the finals 3 years in a row

Oilers look pretty solid for getting back to the Cup too.

 

[Golden_Jet]

You should like at matthew tkachuk and barkov’s salary structure. 90% of it is paid out in signing bonus each season. Only $1mm is salary. Meaning 90% of their pay is not subject to state or city taxes

No that’s false and misleading, you obviously don’t understand a lot of the nuances of taxes, they still pay federal on it.
All depends on where residency is in off season, and then you also have jock taxes.
Matthew’s pays less as long as he spends 1/2 year plus one day in the states.

You already got the 15% wrong in OP.

Not to mention the poster I replied to, was talking about basing it on net income, which has been debunked numerous times, every time a thread like this created.

We need a link to the dozens of other threads on this topic, that explain how taxes work for athletes.
One of the worst misconceptions is people calculating taxes like they pay all 82 games in one place like in OP.

 

[sabremike]

And the difference would be what exactly? We have pretty much the same teams making the deepest run right now. Florida about to make the finals 3 years in a row

2 of those organizations were considered league armpits in recent memory with calls for them to be relocated. They went out and built winning organizations. With no cap the Leafs or Rangers buy every top player and win forever (which is what the Rainjuhz fanboy in the NYP whose whining in today's edition likely inspired this thread wants).

 

[sabremike]

Oilers look pretty solid for getting back to the Cup too.

In a non cap league McDavid stays in Edmonton just long enough to reach UFA and gets handed a check from MLSE roughly as big as the GDP of Belgium.

 

[Fatass]

In a non cap league McDavid stays in Edmonton just long enough to reach UFA and gets handed a check from MLSE roughly as big as the GDP of Belgium.

Which is why it’s good to have a hard cap, no?

 

[sabremike]

Which is why it’s good to have a hard cap, no?

Yup.

 

[frightenedinmatenum2]

The solution would be to keep the cap the way it is, but give players equalization payments that boost their income to the equivalent of the lowest tax team. Factor this extra cost in the CBA calculations for HRR but don't count it against the cap.

So if New York signs a player to an 8M AAV, that player should get additional salary that boosts their after tax+after escrow pay to the same as what it would be on the lowest tax team. Come up with a cost sharing type formula where all teams have to put money into a pool, with the teams with the greatest tax advantage putting in the most money. That pool is used for the non-cap equalization payments that equal out after tax take home pay for all players.

Of course, it would slightly lower HRR and this the cap ceiling because every player not on Vegas, Florida, etc would get a raise that doesn't count against the salary cap. But with the cap going up 20M in 2 seasons, now might be the easiest time to do something like that.

 

[DavidVolek]

What is sad is these "low tax" states are ultimately subsidized by the states that have increased taxes which allows them to have low taxes, it is more of a political issue and among the many corruptions in our country

 

[1989]

I know the analogue is not exactly the same but consider this:

What about the other big 5 sports? The NBA (soft cap+luxury tax), MLS, and NFL all have salary cap systems.

Out of the most recent 10 championships where a winner was based in a no income tax state:
NBA: 1 winner (Dallas), 2 finalists (Miami)
MLS: 0 winners or finalists
NFL: 1 (Tampa Bay), 0 finalists

Most of the winning teams were actually based in California (49ers, Lakers, Golden State Warriors, Galaxy) or somewhere based in the northeast US.

Someone more intelligent than me could tell me why else the majority of competitive teams are not from income tax-free states - to me this just reeks of NHL northern traditionalist market views and small sample sizes.

I still stick with "good players want to play on competitive teams" theory, and that this is just a small sample size of success and correlation in the NHL that we're not seeing anywhere else.

I will say I only did a quick Google search/Wikipedia lookup as I am not deeply interested in the league structuring of the other major sports but on the surface it hardly seems to be the same issue.