State Tax and the Cap

[coachbob]

State/Provincial tax and the Cap.....Are all teams on a level playing field when signing players?
In light of the recent Stamkos UFA situation, do you feel that its fair that a player can sign a contract for substantially less in one city as opposed to another and still earn the same net dollars? Is it a flaw in the cap? Will this be looked at next time the CBA is negotiated?
It must be frustrating for the wealthier teams in the league who are already carrying their weak siblings through revenue sharing. I doubt that a luxury tax would ever be adopted. I would propose that a new formula be used to level the playing field using state tax rates in determining the cap structure.
Ay thoughts?

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[93LEAFS]

Like the idea (as a fan of a rich team), but would never be implemented by the owners or league. Players would one be signing deals for net amounts and tax codes can easily change (PSG ended up having to spend a fortune to balance out Net deals under the new french government). It puts certain teams in trouble if the league (under the force of the NHLPA) state you have to reach a net cap floor. It sucks for us, but I doubt a workable solution works. Owners want cost certainty. An idea I've purposed for years would never work for this reason, which is players should be signed to percentage of the cap, and not actual dollars. But again that messes with the certainties both players, agents and teams prefer.

 

[deletethis]

Is it fair that some franchises can afford to carry injured players away from the salary cap? Is it fair that some franchises could afford to hold onto players until their bonus is paid on July 1st then trade that player away losing the contract's full cap hit? Is it fair that some franchises can pay their front office and coaching staff twice what their competition might pay? Is it fair that one city has average highs of 25C during the winter while another city has average highs of -5C?

You can't make everything fair. The city that might benefit from a higher taxation rate may suffer in other ways. It shouldn't be the NHL's place to correct this.

 

[ACC1224]

I don't think Stamkos went back to Tampa because of taxes.

 

[ToneBone03]

The cap hits from now on should be net income after taxes, not gross.

Really though, taxes are a much larger and complicated obligation than the NHL can properly deal with. Taxes also have the ability to fluctuate. If a new provincial/state government is imposed it could change tax rates and policies dramatically if it decides to propose and implement new legislation. So suddenly, said player may be taking in much more/less after-tax income than the year previous.

Regarding the issue of taking a lesser contract with a team located in a state/province that is subject to lower tax rates, if the player is to make the exact same after-tax income I don't think he would be too concerned about his cap hit. That worry lies with the team offering the contract. The player would just sign the contract with the team he prefers.

 

[NikoPopp]

Is it fair that some franchises can afford to carry injured players away from the salary cap? Is it fair that some franchises could afford to hold onto players until their bonus is paid on July 1st then trade that player away losing the contract's full cap hit? Is it fair that some franchises can pay their front office and coaching staff twice what their competition might pay? Is it fair that one city has average highs of 25C during the winter while another city has average highs of -5C?

You can't make everything fair. The city that might benefit from a higher taxation rate may suffer in other ways. It shouldn't be the NHL's place to correct this.

Your first paragraph is absolutely FAIR because it depends on how successful your franchise is. Nothing is stopping small market teams from becoming big market teams. Its your responsibility as a team to build a big fanbase.

Nobody says Florida can't pay big bucks for coaches or take on injured players besides the owner.

The cap is a LEAGUE built limit and when one team can pay a player the exact same amount as another (after tax) but put 2-3 million less on the cap that is an UNFAIR advantage because there is nothing the second team can do to make up that gap.

 

[Saul Goodman]

The NHL and its communist salary cap and revenue sharing program make me sick.

Small market teams are still able to find success in baseball without a salary cap.

 

[lifelonghockeyfan]

Stop this crap....get the facts.

I'll repeat......and I would like to hear from tax accountants or lawyers.

Pro hockey players (at least in Canada) are paid as ENTERTAINERS. Their pay is not taxed like most people.

Players and their salaries are paid into their private CORPORATIONS. What is the tax rate for corporations....15% in Canada. 35% in the US.

When a player takes out money out of his corporation then he is paid at personal rate. So many players especially those making over 1m a year, can shelter some on in really highly paid players almost all of their player. I know of one NHLer who in 12 years, never took any of NHL salary from his corporation, he lived on other payments players received.

Most players don't live in their primary residences. So when they rent a house in their city where they work....it's a tax deduction from their corporation, as are expensive suits for travel, rented cars in their working city, all kinds of business deductions.

Please don't believe what "sports reporters" write about players tax rates. They don't know and just repeat what other non knowing reporters have written. Of course players don't want the general public know little they pay in taxes compared to most people....so the reality of their taxes
is well published.

Do you know doctors and lawyers are also incorporated? They don't pay personal taxes on their earnings as we know it. Great for doctors who receive much of their money from public funds in Canada.

So comparing taxes from one area of the country (USA) is different than other areas. Canada is different. And what about the players from another country who earn NHL money in one country, Canada or the USA....when the player's "prime residence" is in another country.

It's complicated. Each player is different, and until there is a breakdown doing a complete tax documentation, you can't just say....the Florida tax rate is.....or California's or Ontario's.

 

[lifelonghockeyfan]

The NHL and its communist salary cap and revenue sharing program make me sick.

Small market teams are still able to find success in baseball without a salary cap.

MLB: Probably the least major sports league than doesn't have a significant salary cap. BUT. visiting teams receive 27% of gate revenues....so their is is revenue sharing

The NFL has the most important revenue sharing.....National TV contracts.
NBA has a salary cap (if anyone can understand it) but do share TV revenues.

Yes, it would be possible to get rid the 73 million cap that all 30 teams function in NHL
Get down to 24 teams, and maybe the cap is 90 million
Get down to 16 teams and maybe the cap is 115m
Get down to 8 teams and maybe the cap is 125m.

Do you you the NHL owners who will "left out" what want this? No. And the NHLPA would lose all those jobs, so most players do not want "contraction."