How are state and local taxes going to affect the salary cap of teams?

Maybe this was addressed somewhere but I was just wondering if teams in states like Texas and Florida which don't have a state tax are going to have a leg up on other teams under the new cap in that they can offer a guy the same 5 million as say a team in NY but that player would probrably recieve another 500k in income as he wouldn't have to pay a state tax so he'd be inclined to sign in one of those states as he'd make more money.

And if this is the case teams in Canada would also be at a distinct disadvantage as taxes in Canad for players are significantly more than in the US so that could make for some interesting decisions for players facing these choices.

 

Actually, only a couple Canadian teams would be at a distinct disadvantage. Alberta and Ontario have tax rates that compare favorably with many American states.

Consider cost of living as well.

 

The Stars have made that argument to UFAs before -- at least half your salary will not be taxed by the state. Cost of living in Dallas is fairly reasonable too. Don't know if it had any effect on signings, but it has been thrown out there.

 

I heard on the radio that many people try and make this point, but it actually isn't valid. For example, many people had asked why any professional athelete would want to play in Montreal when the tax rate is so high, but the truth is, they never end up paying the taxes. There is some sort of loophole where if you have a residence in say, Florida, and you claim it is your main residence, you will not end up paying the tax rate in Montreal because you are so often working in the United States.

If you're wondering where I heard this, it was from Pat Hickey on the TEAM 990 yesterday morning.

 

And the difference between high tax states and low/no tax states may not be as great as you think. The differences may only affect half your salary - from home games.

California (and I would assume other states as well) taxes the income earned by visiting players for games played in California - it is considered income earned in the state.

So for every game a visiting player plays in SJ, LA, or Anaheim, the player has a tax liability based on 1/82 of his annual salary at a tax rate as high as 9.3%.

 

Would the premium built-in to the exchange rate help make Canadian cities slightly more equitable?

If I'm earning US dollars but my mortgage or rent payment is in Canadian, that should amount to about an 11% after-tax spread right there...

 

I know that the Titans (NFL) get many free agents due to Tennessee's lack of an income tax.

We also get NFL players retire to this area after a free agent visit due to the lack of a tax and the environment in the Nashville area even when they have never played for the Titans. Brock Marion comes immediately to mind (safety for the Cowboys and Dolphins).

It definitely has an impact and Poile and Trotz have already mentioned that as a strategy to bring in free agents.

David

 

I know the Lightning have also marketed those aspects to potential FA signees. Along with the year round pluses of warmth, sunshine, golf, golf and golf.