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

[Space umpire]

You're missing a MASSIVE piece. Guys like Barky and Chucky are paid league minimum salaries and all of their pay in the form of signing bonus. So 90% of their money is in a tax free jurisdiction.

Actually the signing bonus is paid in July each year and is taxed at the rate of the players legal residence.
For instance Matthews LEGALLY resides in the state of Arizona. His annual signing bonus is not assessed state or local taxes.

 

[Dr Robot]

Is this suggesting that the nhl ought to demand each player's tax return to determine their after tax income?

A system like this can only be done on a player by player basis rather than on a team level. As an example, Auston matthews tax rate is going to be significantly different than mitch marner even though they are in the same bracket due to treaty and residency differences as well as the way each contract is structured. It's opening Pandora's box the deeper you go.

What also gets overlooked is how do we deal with foreign tax returns (Sweden, Russia, etc). I haven’t touched a foreign return in ages so I have zero clue but a Finnish player would have different obligations just based on tax treaties.

 

[Cool Hand Puke]

I think teams should lose $500,000 in cap space every time their fans complain about no tax states.

Canadian teams would have no cap space

 

[Space umpire]

Do u really think Gary would want to give Toronto or Montreal hell and Canadian team an advantage?

You do realize that Bettman works for the owners.

 

[JianYang]

What also gets overlooked is how do we deal with foreign tax returns (Sweden, Russia, etc). I haven’t touched a foreign return in ages so I have zero clue but a Finnish player would have different obligations just based on tax treaties.

Tax treaties are very complex and they generally override the domestic tax acts and regulations.

Those CPAs who specialize in tax services, particularly international tax, are the only ones who can fully appreciate how complex this would get.

 

[JianYang]

Actually the signing bonus is paid in July each year and is taxed at the rate of the players legal residence.
For instance Matthews LEGALLY resides in the state of Arizona. His annual signing bonus is not assessed state or local taxes.

This is a bit of a nuance but the CRA has its own criteria for evaluating whether a taxpayer is resident in Canada for tax purposes.

You are right that matthews has planned his affairs in a way that would deem him a non resident of canada for tax purposes (im not privy to all the facts in his case but im going by reputable reports), but that criteria does not lay reference to any "legal" metric.

 

[Harvey Birdman]

So why wasn’t a team like Florida or Dallas or Tampa dominating before 2020?

After 2020 I can think of one big reason I’d rather be in Florida.

 

[PhysicalGraffiti]

1. Every player can’t play on no tax teams. Thats impossible

2.) it is a competitive edge and always has been a competitive edge. It was just washed out by teams paying more in pre cap years or adding on fake years (hossa). Once that got outlawed it took off as the only loophole left in town

3.) it is NOT out of anyone’s control. The league artificially made the salary cap and left this loophole. There are plenty of ways to address it.
-ie. 32 teams can split 50% hrr based on taxes. So if the cap was 100 million on average. High tax teams could get 105. And low could get 95.

There is NO other league that has a triple hard cap. Comparing other leagues is silly

It's not a competitive edge, but a fact of life.

Move your teams to places with no state income tax. Not sure what to tell you.

The league trying to make financial adjustments because some places are more desirable to play in for taxes, weather, etc. is absurdly misguided and should never be considered.

 

[Jyrki]

Yet another "I can't believe the Knights and Panthers have been well-managed" thread.

 

[Pancakes]

Lol at using the Rangers as an example. They've been a premiere free agent location for years and have never had trouble attracting free agents.

 

[Kaners PPGs]

Compare star players in high tax markets that were winners and had great weather (California teams) big markets (Chicago/nyr) and Canadian teams. You will find that the no state tax players all signed for 10-12.5% aav vs the others which all signed for 13.5-14.5

Compare: barkov. Tkachuk. Reinhart. Bob. Stamkos. Kuch. Hedman. Point. Vasy. Josi. Saros. Guentzel. Forsling Etc.

Vs
Karlson. Doughty. Tavares. Price. Sheshterkin. Trouba. Matthews. Peterson Nylander. Marner Kane. Toews.

You will see for yourself that no state tax players sign for less than comparable markets in size.

For all the intricate explanations about tax rates, signing bonuses, and having smart accountants ect. ect, all I need to do is look at player contracts. No-tax state players consistently sign contracts for less than their counterparts in high-tax states or provinces.

 

[cowboy82nd]

Canadian teams would have no cap space

I agree. No cap space so they can't sign anyone.

 

[Space umpire]

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

As someone who lives in a “no state tax” state I want to see examples of where high tax states are subsidizing me.
The ignored reality is we pay more for property taxes, insurance and fees. Registration of vehicles, pretty much everything.
A large portion of your state income tax goes to pay for emergency services and schools. Here they are large line items on your property taxes.

 

[Legion34]

It's not a competitive edge, but a fact of life.

Move your teams to places with no state income tax. Not sure what to tell you.

The league trying to make financial adjustments because some places are more desirable to play in for taxes, weather, etc. is absurdly misguided and should never be considered.

Are you kidding? The league DID make financial adjustments because some places are more desirable to play and some markets make more money.

The salary cap is an artificial league adjustment. The league decided to make a financial that says that Toronto/nyr/la should not be Able to spend more than Columbus.

How do you not see that?

 

[Space umpire]

For all the intricate explanations about tax rates, signing bonuses, and having smart accountants ect. ect, all I need to do is look at player contracts. No-tax state players consistently sign contracts for less than their counterparts in high-tax states or provinces.

That’s up to the players themselves. Matthews chose to give no discount to Toronto while over 90% of his income (signing bonus) is paid to his legal Arizona (no state tax) address.
Our own (previously) Seth Jones played in Ohio and Illinois while maintaining his legal residence in Tennessee.

 

[Legion34]

Lol at using the Rangers as an example. They've been a premiere free agent location for years and have never had trouble attracting free agents.

And they have never got players to sign for the rate that they consistently sign in no state tax areas.

If the rangers are such a desirable place to play. Then why do they have to pay 14% of the cap to star ufas?

Panarin/sheshterkin? Why did they have rk pay Trouba 8 million? Lafrienere.

If you take 10 minutes and look. You will see that Toronto. NYR. LA. Chicago all have to consistently pay much higher than Florida/tampa/dallas/vegas.

 

[Legion34]

That’s up to the players themselves. Matthews chose to give no discount to Toronto while over 90% of his income (signing bonus) is paid to his legal Arizona (no state tax) address.
Our own (previously) Seth Jones played in Ohio and Illinois while maintaining his legal residence in Tennessee.

That’s not exactly true. There are agreements that you don’t get taxed twice. From Canada to America. You have to also prove you don’t have greater financial ties to Canada (hard when you live in Canada and play 60% of your games here). He can’t own property. He can’t have cars. Playing 2 weeks against a playoff Canadian team might change it for Matthews.

It’s not as simple because he spends most of his time and most of his games in Canada. It’s backwards to stamkos who lives in Florida sep-may and plays 65% of his games in the us

 

[Perfect_Drug]

Dougie Hamilton wants to know what the museum situation is like in Florida.

 

[Kaners PPGs]

That’s up to the players themselves. Matthews chose to give no discount to Toronto while over 90% of his income (signing bonus) is paid to his legal Arizona (no state tax) address.
Our own (previously) Seth Jones played in Ohio and Illinois while maintaining his legal residence in Tennessee.

How many players in no-tax states have to sign discounted contracts for you to realize that the tax-savings played a role?

 

[MikeyMike01]

I put this idea out there in 2005 about trading cap space and I think this still holds some merit as a mechanism for softening up the cap to introduce more flexibility.

Any team that doesn't spend to the cap should be able to sell or trade its unused cap space as a form of currency and revenue sharing mechanism. Maybe it's a dollar for dollar buy or maybe it's picks and prospects.

It basically keeps the HRR within the approved parameters and any team that feels hard done by some other economic factor can spend a little bit more. Maybe you cap the luxury spending, maybe you don't.

In the NFL, unused cap space rolls over to the next season. It’s a much better system.

 

[Voight]

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

It's really this simple. Tampa, Florida and Dallas weren't signing top free agents or retaining their best players when they were bad teams.

 

[Space umpire]

That’s not exactly true. There are agreements that you don’t get taxed twice. From Canada to America. You have to also prove you don’t have greater financial ties to Canada (hard when you live in Canada and play 60% of your games here). He can’t own property. He can’t have cars. Playing 2 weeks against a playoff Canadian team might change it for Matthews.

It’s not as simple because he spends most of his time and most of his games in Canada. It’s backwards to stamkos who lives in Florida sep-may and plays 65% of his games in the us

Most of that is either wrong or misleading.
Many professions have people “on the road” for the majority of any given year.
Matthews “WORKS” in Toronto his legal residence is in Arizona. Signing bonuses are paid at the residence rate. The rest is based on the city, state/province where the money was earned.
He owns a home in Arizona and rents a luxury condo in Toronto (which is at least partially deductible as a cost of him doing business in Toronto). If he chose he can certainly OWN a car with Arizona plates though I believe the vehicle he drives there is payment for a commercial.

Also to the person who claimed they have to have resided in a place 6 months plus a day is also misleading. Traveling for work is subtracted from that.

 

[Space umpire]

How many players in no-tax states have to sign discounted contracts for you to realize that the tax-savings played a role?

It only plays a role in the minds of fans. I only used 1 example (Matthews) he maxed out his numbers in Toronto while paying no state/province taxes on over 90% of his income.

 

[Reality Czech]

The solution is other states and countries should lower their taxes lol

 

[Legion34]

It's really this simple. Tampa, Florida and Dallas weren't signing top free agents or retaining their best players when they were bad teams.

No it’s not. It’s not a cycle. The rules tangibly changed in 2013-2014 when the back diving contracts were outlawed. Almost immediately after no state tax teams had a massive advantage and all of them
At the exact same time started to get players to sign for less. That’s not a cycle.