Tavares fighting Canadian tax authority over $8m from $15.3m signing bonus

[theVladiator]

I don’t know that the articles and details I’ve seen so far definitively say the CRA isn’t pursuing a change in the status quo.

However the simple fact that this case is for the 2018 tax year and we haven’t heard leaks about other similar CRA actions for the many other players like Matthews using a similar tax reduction strategy for signing bonuses suggest this isn’t a step in changing the status quo.

Yeah, I am kind of reading between the lines there. In terms of CRA's position, the original reports (CBC sport, National Post) indicate that CRA hasn't filed the response to Tavares appeal, so we can't be absolutely sure what CRA position is. The more recent article (CBC business) makes claims about CRA position, including treating bonus as salary, but I really doubt CRA would file a response within 2 days of Tavares appeal filing, so I am looking at it as less than accurate reporting atm.

 

[eojsmada]

h

Yeah, I am kind of reading between the lines there. In terms of CRA's position, the original reports (CBC sport, National Post) indicate that CRA hasn't filed the response to Tavares appeal, so we can't be absolutely sure what CRA position is. The more recent article (CBC business) makes claims about CRA position, including treating bonus as salary, but I really doubt CRA would file a response within 2 days of Tavares appeal filing, so I am looking at it as less than accurate reporting atm.

Yeah...there are lots of assumptions that have to be made from the articles. And without the CRA response, it's hard to piece altogether. What is 100% clear is that as soon as Tavares signed with the Leafs, he made himself fully liable to Canada Revenue, because he's a Canadian citizen. If he had tie-broken, being in NY, he re-established his ties as soon as he put pen to paper.

 

[Legion34]

So, you take everything Bettman says to heart? Sorry, not me. It was a cute talking point, but the only concern was controlling player costs.

???? Controlling player costs could be done with out making all teams have the same cap.

Again. If controlling player costs was the only concern. Why can’t teams have different caps?

The rangers could have a 100 million dollar cap and the coyotes have 60.

That is just as certain as 2 teams making 80.

 

[Legion34]

Also where are @DistantThunderRep and @Throw More Waffles

To tell us that there are no discrepancies in take home pay in Florida and Toronto markets and that players can just use tax loopholes to even out the clear structural
Advantages to no state tax teams.

The idea that the Canadian government isn’t going to try to get as much money off of Anyone, never mind a millionaire with public ally available salary disclosure is insane.

 

[DingerMcSlapshot]

Tavares going to lose. No Brainer. It will change the way contracts are written in the future.

 

[Hockey Outsider]

Without seeing the documents from CRA, we don't know exactly what the issue is. (And I'm skeptical of journalists trying to summarize these highly technical tax issues in a short article). With that said, I'll offer some speculation.

Assuming that what's been reported is reasonably accurate, it appears that only Tavares' 2018 bonus is in dispute.

Generally speaking, under the Canada/US tax treaty, if a professional athlete receives a signing bonus in Canada, but is a resident (for income tax purposes) in the United States, the bonus is only taxed at 15% in Canada. The remainder is taxed in the US at the federal & state level (and they receive a foreign tax credit for the amounts paid in Canada). In most situations, this is better for the taxpayer, since tax rates in Canada are generally higher.

Determining residence status is a question of fact. In Canada, the three primary ties are the location of the person's residence (home), spouse, and children. There are a wide range of secondary ties (too long for me to list here). If Tavares owned a home (or at least had a long-term apartment lease) in New York, and if his wife lived with him there, at the time the 2018 signing bonus was paid, he probably would have taken the position that he's a US resident for income tax purposes. (This is a simplification of a complex issue, but good enough for purposes of this post).

There are two potential issues here, with very different implications for the league:

1) Did Tavares signing with the Leafs make him a resident of Canada? CRA could take the position that, by signing a contract with the Leafs, he immediately became a resident of Canada (assuming he wasn't already). CRA would presumably argue that, given that it was a long-term contract with a no movement clause, and given that he's from the GTA (and therefore presumably has significant family and social ties), although he may not have physically moved already, in substance, he immediately became a Canadian resident the moment the contract was signed. I don't think this is a strong argument, but we'll see how it plays out.

2) Was Tavares' signing bonus, in substance, salary? This is an interesting and much broader question. CRA could take the position that the signing bonus was, in substance, salary. If that's the case, the rules I mentioned above (only 15% being taxed in Canada) wouldn't even apply (since they're applied to bonuses only) - and the question of whether Tavares was a resident of Canada would be irrelevant. Tavares' best argument is that two independent parties with potentially conflict goals - him vs the Maple Leafs - mutually agreed that this was a signing bonus, and the cash was paid out in accordance with that agreement.

CRA would probably argue that, in substance, the signing bonus was part of his regular salary. They would likely point out that, throughout the entire contract, Tavares' salary was barely above league minimum ($910K), which is clearly too low for a player of his caliber. They would also likely point to the fact that he earned a $7M+ signing bonus every year of the contract (and the 2019 signing bonus was only very slightly less than the 2018 signing bonus) - so it wasn't really a "signing" bonus if he gets it every year, to compensate for an artificially low base salary.

It will be interesting to see how this plays out. The first issue is quite narrow, and I can't see it having a big impact on the NHL. The second issue is broad, and could have a significant change on how NHL players (and other professional athletes) are taxed.

 

[JianYang]

Note that Tavares would still be paying U.S. taxes on the signing bonus, with a 15% foreign tax credit offset for the taxes paid to Canada.

Also, for anyone trying to do the math, keep in mind the CRA is claiming Tavares owes $8m CAD. While his $15.25m signing bonus was in USD.

If tavares is a canadian resident, does the foreign tax credit still apply to him though.

It's a question I have because I've been wondering if it's more advantageous for an American to be playing in Canada than a Canadian in Canada.

 

[JianYang]

h

Yeah...there are lots of assumptions that have to be made from the articles. And without the CRA response, it's hard to piece altogether. What is 100% clear is that as soon as Tavares signed with the Leafs, he made himself fully liable to Canada Revenue, because he's a Canadian citizen. If he had tie-broken, being in NY, he re-established his ties as soon as he put pen to paper.

I think residency is key from an income tax perspective. Canadian citizenship on its own would not be enough to prove residency.

I think America is a bit different in that sense where you would be taxed based on citizenship but the key term in Canada is resident.

 

[Voight]

Without seeing the documents from CRA, we don't know exactly what the issue is. (And I'm skeptical of journalists trying to summarize these highly technical tax issues in a short article). With that said, I'll offer some speculation.

Assuming that what's been reported is reasonably accurate, it appears that only Tavares' 2018 bonus is in dispute.

Generally speaking, under the Canada/US tax treaty, if a professional athlete receives a signing bonus in Canada, but is a resident (for income tax purposes) in the United States, the bonus is only taxed at 15% in Canada. The remainder is taxed in the US at the federal & state level (and they receive a foreign tax credit for the amounts paid in Canada). In most situations, this is better for the taxpayer, since tax rates in Canada are generally higher.

Determining residence status is a question of fact. In Canada, the three primary ties are the location of the person's residence (home), spouse, and children. There are a wide range of secondary ties (too long for me to list here). If Tavares owned a home (or at least had a long-term apartment lease) in New York, and if his wife lived with him there, at the time the 2018 signing bonus was paid, he probably would have taken the position that he's a US resident for income tax purposes. (This is a simplification of a complex issue, but good enough for purposes of this post).

There are two potential issues here, with very different implications for the league:

1) Did Tavares signing with the Leafs make him a resident of Canada? CRA could take the position that, by signing a contract with the Leafs, he immediately became a resident of Canada (assuming he wasn't already). CRA would presumably argue that, given that it was a long-term contract with a no movement clause, and given that he's from the GTA (and therefore presumably has significant family and social ties), although he may not have physically moved already, in substance, he immediately became a Canadian resident the moment the contract was signed. I don't think this is a strong argument, but we'll see how it plays out.

2) Was Tavares' signing bonus, in substance, salary? This is an interesting and much broader question. CRA could take the position that the signing bonus was, in substance, salary. If that's the case, the rules I mentioned above (only 15% being taxed in Canada) wouldn't even apply (since they're applied to bonuses only) - and the question of whether Tavares was a resident of Canada would be irrelevant. Tavares' best argument is that two independent parties with potentially conflict goals - him vs the Maple Leafs - mutually agreed that this was a signing bonus, and the cash was paid out in accordance with that agreement.

CRA would probably argue that, in substance, the signing bonus was part of his regular salary. They would likely point out that, throughout the entire contract, Tavares' salary was barely above league minimum ($910K), which is clearly too low for a player of his caliber. They would also likely point to the fact that he earned a $7M+ signing bonus every year of the contract (and the 2019 signing bonus was only very slightly less than the 2018 signing bonus) - so it wasn't really a "signing" bonus if he gets it every year, to compensate for an artificially low base salary.

It will be interesting to see how this plays out. The first issue is quite narrow, and I can't see it having a big impact on the NHL. The second issue is broad, and could have a significant change on how NHL players (and other professional athletes) are taxed.

Given he was under contract to a US team until June 30th, 2018 it seems pretty cut and dry? He was obviously a US resident when the bonus was paid, no?

*Unless the bonus was paid July 1st, 2019 and not July 1st, 2018.

 

[Golden_Jet]

This is entirely incorrect.

Bettman instituted and absolutely wanted parity. He said it. He still says it. He instituted it.

Cost certainty can be applied by having different teams have different caps. As long as the total salaries league wide equal 50% of hrr they have filled the requirement.

Team a gets to spend 100 million. Team B gets to spend 50 million

Is just as certain as

Team A and B both spending 75

The idea that 32 teams with different markets and different revenues all have the same parameters is parity

Wrong, the salary cap was introduced as cost certainty, parity is a result. Bettman had said this ad nauseum..


Salary cap is based off the midpoint.
Minimum cap is 85% of midpoint, and maximum is 115% of the midpoint. So exactly what you want, some can spend more, some less.
League doesn’t need another MLB joke of a system.

Given he was under contract to a US team until June 30th, 2018 it seems pretty cut and dry? He was obviously a US resident when the bonus was paid, no?

*Unless the bonus was paid July 1st, 2019 and not July 1st, 2018.

He was living in Toronto, after Islanders season ended. He spent too many days in Canada, that was his problem.

 

[Legion34]

Wrong, the salary cap was introduced as cost certainty, parity is a result. Bettman had said this ad bauseum.


Salary cap is based off the midpoint.
Minimum cap is 85% of midpoint, and maximum is 115% of the midpoint. So exactly what you want, some can spend more, some less.
League doesn’t need another MLB joke of a system.


He was living in Toronto, after Islanders season ended. He spent too many days in Canada, that was his problem.

Ok. Let’s try again.

There is NO reason that all 32 teams have to have the same cap max/min to have cost certainty. The fact that all 32 teams have to have the same is artificial parity that has been imposed by the league

A team has 83.5 million to spend. That is cost certainty.

If all players on a team were get the exact same salary/cap hit. That would be parity

This is pretty clear. There is NOTHING that requires all teams to have the same cap restrictions to ensure cost certainty

 

[Golden_Jet]

There is NOTHING that requires all teams to have the same cap restrictions to ensure cost certainty

Yeo, you can spend 83 million or 61 million, your choice.
You still need the 50/50 split, your system would just end up with more escrow for players, which they hate.

 

[No Fun Shogun]

The fact is that big market teams love the cap, too, as it gives them a pretty convenient excuse to make money. I know their front offices like to bemoan cap constraints, but behind closed doors you better believe that the owners of profitable teams are laughing all the way to the bank.

 

[EdJovanovski]

I think its time for The League, the NHLPA and the tax authorities to finally level the playing field on tax advantages be it lower rates, RCAs in Canada or bonus structures that the rich teams can offer. Forgive me if this gets long

They need a model that works like how professional income (think partner in a law firm) gets taxed across provinces in Canada. If I am a partner in the Winnipeg office of a national law firm in Canada with offices in BC, AB, MN, ON and Quebec I am not just taxed in Manitoba based on residency even if I never leave Manitoba and all my clients are in Manitoba. I am taxed in all the jurisdictions where we have an office. Lets say my share of the partnership profits is 1% of the total across the firm and works out to $1 million (we are pretty successful representing NHL players in tax court). If 40% of the firms revenue comes from The Ontario offices I am taxed at the provincial level on 40% of my million in Ontario, 25% in Qc 10% in Bc, 155 in Ab and what's left 10% in Manitoba.

Tax laws in Cda and US would have to amended to make this work. Create a partnership (limited so no player liability) Each team Pays its salary dollars to the partnership and the partnership pays the players. The money in equals the money out. Then the players are taxed based on jurisdiction where the money came from. I.e. if Toronto and Ottawa collectively pay $200 million in salary out of total NHL salaries of 3 billion. Then 200M/3B or 6.67% of every players salary is taxed in Ontario regardless of their residency like the lawyer living in Manitoba. Similarly Arizona has a 80M payroll out of 3B so 2.67% of every players salary is taxed there and so on. Then do like the NBA and ban RCAs and other tax advantages not available to all. Signing bonuses can still be paid but they are taxed as professional income so no tax advantage only advantage is you get you $$ earlier.

Trades would not matter, a guy traded from a low tax jurisdiction to a higher will not pay more tax as he like everyone else is taxed in proportion to the partnerships revenue which is really the teams proportional salary cost. Their would be no perceived or real advantage to playing in a low tax jurisdiction.

Gary, if you read this and adopt my plan I will need 2 tickets for a home game in every arena for next season and maybe a few bucks to cover my travel costs

They should change the weather to make it more equal too, not fair that certain places have nicer weather. Ban fans from approaching players in Canada too, even the playing field. There are pros and cons that players weigh when deciding where to play, the lower taxes can even be said to balance out being a less metropolitan city and having less amenities etc in the first place. Your idea is insane.

 

[Legion34]

Yeo, you can spend 83 million or 61 million, your choice.
You still need the 50/50 split, your system would just end up with more escrow for players, which they hate.

Yes. And that range is parity.

You could also allow 16 teams to spend 93/71 and 16 to spend 73/51 That’s every bit as certain as the current system.

The players get 50% there is no reason why each team has to have the the same exact cap guidelines as long as the players get 50% of hrr

 

[Golden_Jet]

I think its time for The League, the NHLPA and the tax authorities to finally level the playing field on tax advantages be it lower rates, RCAs in Canada or bonus structures that the rich teams can offer. Forgive me if this gets long

They need a model that works like how professional income (think partner in a law firm) gets taxed across provinces in Canada. If I am a partner in the Winnipeg office of a national law firm in Canada with offices in BC, AB, MN, ON and Quebec I am not just taxed in Manitoba based on residency even if I never leave Manitoba and all my clients are in Manitoba. I am taxed in all the jurisdictions where we have an office. Lets say my share of the partnership profits is 1% of the total across the firm and works out to $1 million (we are pretty successful representing NHL players in tax court). If 40% of the firms revenue comes from The Ontario offices I am taxed at the provincial level on 40% of my million in Ontario, 25% in Qc 10% in Bc, 155 in Ab and what's left 10% in Manitoba.

Tax laws in Cda and US would have to amended to make this work. Create a partnership (limited so no player liability) Each team Pays its salary dollars to the partnership and the partnership pays the players. The money in equals the money out. Then the players are taxed based on jurisdiction where the money came from. I.e. if Toronto and Ottawa collectively pay $200 million in salary out of total NHL salaries of 3 billion. Then 200M/3B or 6.67% of every players salary is taxed in Ontario regardless of their residency like the lawyer living in Manitoba. Similarly Arizona has a 80M payroll out of 3B so 2.67% of every players salary is taxed there and so on. Then do like the NBA and ban RCAs and other tax advantages not available to all. Signing bonuses can still be paid but they are taxed as professional income so no tax advantage only advantage is you get you $$ earlier.

Trades would not matter, a guy traded from a low tax jurisdiction to a higher will not pay more tax as he like everyone else is taxed in proportion to the partnerships revenue which is really the teams proportional salary cost. Their would be no perceived or real advantage to playing in a low tax jurisdiction.

Gary, if you read this and adopt my plan I will need 2 tickets for a home game in every arena for next season and maybe a few bucks to cover my travel costs

Players are currently taxed where each game is played, if they play 8 games in California. Then they are taxed for 8 games at the California rate. If they play 6 games in Florida, then taxed for 6 games at Florida rate. If 4 games in Ontario, then taxed 4 games at Ontario rate, etc.

 

[Golden_Jet]

Yes. And that range is parity.

You could also allow 16 teams to spend 93/71 and 16 to spend 73/51 That’s every bit as certain as the current system.

The players get 50% there is no reason why each team has to have the the same exact cap guidelines as long as the players get 50% of hrr

Great in theory, but currently 16 teams don’t pay under the midpoint to balance out what you want. All 32 teams are over the midpoint. That is why we have escrow.

The 50/50 revenue split is calculated from HRR, to determine the midpoint.
Players would be paying way more escrow for your system.

 

[DistantThunderRep]

Also where are @DistantThunderRep and @Throw More Waffles

To tell us that there are no discrepancies in take home pay in Florida and Toronto markets and that players can just use tax loopholes to even out the clear structural
Advantages to no state tax teams.

The idea that the Canadian government isn’t going to try to get as much money off of Anyone, never mind a millionaire with public ally available salary disclosure is insane.

Did you not read the lawsuit? He's suing the CRA because they falsely taxed his bonus while he was living in the states? The f*** are you on about? Sorry reality doesn't fit your narrative.

 

[Legion34]

Did you not read the lawsuit? He's suing the CRA because they falsely taxed his bonus while he was living in the states? The f*** are you on about? Sorry reality doesn't fit your narrative.

This is completely incorrect.

1.) Tavares is Not suing the government for money he paid. He is appealing a decision that the CRA has made about back taxes.

What happened was he filed his return. He was audited and the CRA decided to claw back 6.8 million in taxes AND 1.2 in interest from years ago. was suing for over taxing He wouldn’t owe interest right?

2.) he is arguing that he can avoid Canadian/Ontario taxes on his SB at 15% the first year because he was a resident of US That’s why SB are good. Tampa players get taxed on SB at place of residency.

This is literally the argument that people including yourself posted in that accountants article about how JT can structure his taxes to avoid the clear disadvantage.

Even if he wasn’t. Many people have incorrectly assumed that there are just loopholes for players in Canadian markets to just claim us residency RCAs etc.

As I have said from the start. The government wants its money.

All the people who argue that you can just easily claim us residency (even American players) over the life of a contract is wrong are a bunch of criteria that you have to meet and the government can disagree and fine you.

This one seemed like a slam dunk for him but the government STILL issued him a bill and interest. They obviously know this will be public and are still trying.

Now he has to go to court to prove it

 

[snag]

Canadian Taxpayers Federation and Americans for Tax Reform did a report on taxation in the NHL (albeit in 2014)

I was very surprised by the findings. Particularly where Edmonton and Calgary are concerned.

https://www.taxpayer.com/media/CTF-HomeIceDisadvantage.pdf

 

[Ted Hoffman]

Yes. And that range is parity.

You could also allow 16 teams to spend 93/71 and 16 to spend 73/51 That’s every bit as certain as the current system.

The players get 50% there is no reason why each team has to have the the same exact cap guidelines as long as the players get 50% of hrr

It's accurate to say that the salary cap exists to help achieve the goal of parity. It's also accurate to say that the primary goal of the salary cap [as implemented in North America] is not parity. If parity happens, that's a bonus; the overwhelming goal was to control player costs.

To your question: why couldn't teams have different salary caps? They could. That happens with La Liga, where every team has a different salary cap - and, that practically guarantees the top 3-4 teams to be the top 3-4 teams forever because of their ability to spend multiples more than other teams. And if the have's in the NHL decided they wanted that, they could ostensibly do that. [Discussion of those implications withheld, because I only have so much time at the moment.]

In the North American salary cap model, that doesn't happen: each team has an equal amount it can spend. The tradeoff: low-revenue teams can still compete and have a shot at winning a title, but they aren't guaranteed profits otherwise; high-revenue teams can compete for a title, and if they don't win one they can still sock away millions in profits.

 

[Legion34]

It's accurate to say that the salary cap exists to help achieve the goal of parity. It's also accurate to say that the primary goal of the salary cap [as implemented in North America] is not parity. If parity happens, that's a bonus; the overwhelming goal was to control player costs.

To your question: why couldn't teams have different salary caps? They could. That happens with La Liga, where every team has a different salary cap - and, that practically guarantees the top 3-4 teams to be the top 3-4 teams forever because of their ability to spend multiples more than other teams. And if the have's in the NHL decided they wanted that, they could ostensibly do that. [Discussion of those implications withheld, because I only have so much time at the moment.]

In the North American salary cap model, that doesn't happen: each team has an equal amount it can spend. The tradeoff: low-revenue teams can still compete and have a shot at winning a title, but they aren't guaranteed profits otherwise; high-revenue teams can compete for a title, and if they don't win one they can still sock away millions in profits.

Yes. Exactly this.

I am not saying that the NHL is necessarily wrong in doing this. But if you are going to enforce parity by an equal cap. Equalize cap hit based on taxes.

What I am disagreeing with is the idea that all the NHL cares about is cost certainty. If they did different teams could spend different amounts as long as the HRR was 50%

 

[Ted Hoffman]

I am not saying that the NHL is necessarily wrong in doing this. But if you are going to enforce parity by an equal cap. Equalize cap hit based on taxes.

Which sounds easy enough, right? Except when you say "equal cap" and "taxes" you are implicitly saying all taxes, and once you narrow it down to well, I only mean income taxes you're admitting you don't really want it to be equal, you just want the appearance of it being equal.

Let me give a practical example of why this could be problematic, though: say the baseline cap is $100 million and then teams get "extra" based on income taxes. Let's make this really simplistic and say we're only counting state taxes, and the "extra" any team gets is 100 / (1-x) where x = the state tax rate (in percent). Nashville, Dallas, Tampa, Florida and Seattle - all in states where there's no income tax - have a cap of $100 million; Chicago (where the income tax is 4.95%) has a cap of $105.2 million to spend.

Illinois suddenly repeals its income tax, and Chicago has allocated $104 million to player salaries for the next season. The Blackhawks now have to cut $4 million to get under the new cap of $100 million - which, because contracts are guaranteed, they can't unilaterally cut $4 million, which means they have to trade out $4 million in contracts. Or, failing that, they have to buy out players to get under; buyouts count against the cap, and to cut $4 million they really need to cut 3x that (assuming 2/3rds cost) to get the 1/3rd cap savings ... meaning they have to cut like $12 million to get under ($12M x 2/3 = 8M, which now saves $4M that gets them under). But, that's $8M they have to carry in dead cap space for however long.

Maybe state income tax rates don't change that often ... but they do change - and it would be unfair to suddenly penalize teams for actions out of their control. Then layer on other taxes that have to be considered (sales tax, property tax, personal property tax) and the fact that the professional athlete jock tax imposed by some places has a very non-negligible impact as has been demonstrated repeatedly.

Oh, and there's an entire escrow side of this - right now, everyone shares the burden equally; if teams have different caps, shouldn't players on teams with higher caps [who are more likely to drive spending over the 50/50 split point] pay more of the escrow burden? If players are traded, that's an entire set of math calculations that have to be carried for every player; who's tracking all of that?

I'm going to repeat what I've said before: if no state income tax was such a boon for sports franchises in those states, why aren't franchises in those states overwhelmingly more successful? They're not. Teams in "no income tax" states aren't winning titles, aren't highly competitive, because they're constantly attracting players who want to pay no income tax, and they're certainly not winning a disproportionate amount of titles or even regular season games, division titles, whatever with that alleged advantage. This "massive advantage" is grossly overblown, even in sports where a salary cap has existed for years and players should have figured out how to maximize their income within it.

 

[Legion34]

Which sounds easy enough, right? Except when you say "equal cap" and "taxes" you are implicitly saying all taxes, and once you narrow it down to well, I only mean income taxes you're admitting you don't really want it to be equal, you just want the appearance of it being equal.

Let me give a practical example of why this could be problematic, though: say the baseline cap is $100 million and then teams get "extra" based on income taxes. Let's make this really simplistic and say we're only counting state taxes, and the "extra" any team gets is 100 / (1-x) where x = the state tax rate (in percent). Nashville, Dallas, Tampa, Florida and Seattle - all in states where there's no income tax - have a cap of $100 million; Chicago (where the income tax is 4.95%) has a cap of $105.2 million to spend.

Illinois suddenly repeals its income tax, and Chicago has allocated $104 million to player salaries for the next season. The Blackhawks now have to cut $4 million to get under the new cap of $100 million - which, because contracts are guaranteed, they can't unilaterally cut $4 million, which means they have to trade out $4 million in contracts. Or, failing that, they have to buy out players to get under; buyouts count against the cap, and to cut $4 million they really need to cut 3x that (assuming 2/3rds cost) to get the 1/3rd cap savings ... meaning they have to cut like $12 million to get under ($12M x 2/3 = 8M, which now saves $4M that gets them under). But, that's $8M they have to carry in dead cap space for however long.

Maybe state income tax rates don't change that often ... but they do change - and it would be unfair to suddenly penalize teams for actions out of their control. Then layer on other taxes that have to be considered (sales tax, property tax, personal property tax) and the fact that the professional athlete jock tax imposed by some places has a very non-negligible impact as has been demonstrated repeatedly.

Oh, and there's an entire escrow side of this - right now, everyone shares the burden equally; if teams have different caps, shouldn't players on teams with higher caps [who are more likely to drive spending over the 50/50 split point] pay more of the escrow burden? If players are traded, that's an entire set of math calculations that have to be carried for every player; who's tracking all of that?

I'm going to repeat what I've said before: if no state income tax was such a boon for sports franchises in those states, why aren't franchises in those states overwhelmingly more successful? They're not. Teams in "no income tax" states aren't winning titles, aren't highly competitive, because they're constantly attracting players who want to pay no income tax, and they're certainly not winning a disproportionate amount of titles or even regular season games, division titles, whatever with that alleged advantage. This "massive advantage" is grossly overblown, even in sports where a salary cap has existed for years and players should have figured out how to maximize their income within it.

Yes. Income taxes. Because the league is artificially capping income. Not real estate, buying of cars etc.

1.) Are you kidding?
A no state tax team has been in every final since 2017 right ?

Nashville. Tampa x3 Florida. Dallas. Vegas x 2

The only one that hasn’t is Seattle and they are in their 2nd year.

I’m pretty sure the only final that didnt have one tax free team was bruins and blues.

They have been massively over represented in finals. Division titles. Finalists and cups.
Since the NHL did away with the back diving contracts.

2.) even the idea that even if you were right, that isn’t a good argument for an advantage.

Toronto and New York had one cup between them since expansion. Does that mean that there was no advantage to their salary structure?


3.) you absolutely could do it. There are calculators on line to figure it out now. As per year by year. Teams plan for performance bonuses the following year. Cap escalators. Heck a pandemic just happened.

The idea that we cannot fix a clear structural advantage because a state/province is just going to wake up one day and change the taxes on its citizens isn’t a good reason.

 

[JohnBlutarski]

And people wonder why guys don't want to play in Canada lol.