Confirmed Signing with Link: [TBL] Kucherov re-signs with the Lightning (8 years, $9.5M AAV)

[North Cole]

They do. And the cap would need to be calculated every time after a new schedule is made so it's known how many times which team plays where. It'd be a disaster to organize so it obviously will never happen.

What do you mean the cap would have to be calculated? If the cap was based on where they played for tax purposes?

You pay income tax where the work is performed, not where you live, so no. All pro athletes have to pay the tax of where ever they earn the money not just where the home office is.

I was evidently wrong but it would be more helpful if you cited or named the tax law. I was able to find it; it is called the "jock tax". No, most working professionals do not pay tax where the work is performed because the government's of respective states and cities can not keep track of the average citizen. It's not as though the average person will step up and say, "I worked in new York for 3 days, take some more of my money". Haha!

In regards to the jock tax, I believe you are significantly oversimplifying the process. In Alberta it is apparently calculated as:

salary/180gp × games played in Alberta × tax rate (12.5%).
-where 180gp is the calendar length of the regular season​

It applies to all players, even those who play for the oilers and flames. In the case of Alberta based players it is additional to their Alberta provinca tax. I assume it also an additional tax to US players in their states?

IE - they pay the tax on top of their state tax at home. Or is 'duty days' (more on this) not calculated for hockey players in their home state?​

I'd be interested to see what kind of tax credits that Tampa players are allowed to claim both federally and stateside. Its far more complicated than - you play somewhere you pay the tax there. 'Filing 15 non-resident tax retuns' (which teams appear to do the leg work for) has an effect on your resident return. The US in general seems to use a different calculation from Alberta, whereby they use "duty days" instead of the "games played method". Duty days are more comprehensive then the 180 day reglar season method, but it sounds like you get taxed for being in the city with the team...so practices/meetings etc. Obviously the States have significant indicidual power because you are a Republic, which is also something to consider opposite of our provincial tax law, where we are more federally oriented.

There was a blurb in the article where in 02/03 chelios, earning a similar salary to iginla, paid $16,443 for his four games played in Alberta. By comparison, iginla played 41 games and paid an additional 165k on top of his provincial tax. Players who play 4 games in Tampa may play less tax for those 4 games, but it is not comparable to playing 41 games in Tampa.

Lastly, it seems signing bonuses are exempt from the jock tax in most places. So the players like Tavares and Mcdavid are actually taxed far less in places they play since their base salaries are quite low. Mcdavid - 2m. Tavares - 1m. Obviously that is an added bonus to these types of contracts.

It was a nice read since I'm working toward being an accountant and enjoy tax law. I learned a new thing, so thanks. I still believe you are oversimplifying the benefit to non-residents of Florida.

 

[North Cole]

If you sign a 10 million signing bonus then that would be taxed where?

Signing bonuses are exempt from the jock tax in most places. So it is paid in your residency. Then you pay your floating tax where you work, according to your base salary.

Easiest example from the research I just did, damn marginal tax rates now:

McDavid - 2m salary/180gp × 41gp in Alberta × 15% = $68,333. His NHL players tax for the season for Alberta.

His income tax is:
15m - 307,548 × 15% = $2,203,867
Then add all the marginal tax rates up
$12,814 + $3,075 + $6,663 + $14,355....
= $2,240,774.... + NHL players tax
= $2,309,107.

Provincial tax in bold. Does not inlude investments, nor deductions, nor taxes paid in other provinces/states or their respective tax credits and shields. Rough calculation and is likely off by +/- 100k.

McDavid would then continue to pay tax in the places he plays either on a per game basis or by duty days, but the calculation is done based on his 2 million in salary, as opposed to his actual income of 15 million. Saves him a lot of money. Wouldn't save him as much if he played in Manitoba though.

 

[LeapOnOver]

Perhaps that was wrong term to use but I meant to trade them now for a pick or whatever to some team for one year. There would be no risk at all to trade for Girari/Coburn as they have only one year left and they could be useful to teams who are looking for bottom pairing defensemen. They wouldn't really bring back any value but we wouldn't have to add either. And if we were to trade them the point wouldn't to get value back, it would be to get some cap space.

I just don't think anybody is going to trade (especially at this juncture) for a bottom pairing defenseman making that much money. Don't get me wrong, we've seen some stupid GM's out there, but it's going to take a stupid one to do that. If the Bolts want EK now, they are going to need to move guys that are desirable. There are going to be defenseman as good as Girardi and Coburn that are going to be on waivers come late September. You can get a bottom pair defender like that without needing to give up any picks in return.

 

[LightningStrikes]

I don’t think anyone worth listening to is saying otherwise.

Tampa has done an amazing job. They have drafted well, competed hard and made solid trades. No tax advantage in the world affects their ability to pick up top line talent in later rounds of the draft.

First class organization top to bottom. No question. No tax advantage makes up for the lifestyle differences for players and their families like living on the beach in the winter. No question. A winning team will be able to attract FA.

The issue is the principle. Large market teams were completely neutered in terms of their big advantage. Which is fine and needs to happen. But if we are going to do this it has to be fair in the way that the league chooses to restrict a free market system to create fairness. That’s all.

I think you’re making a good point but classic big market teams have their advantages too, like endorsements no player would get in the Tampa area. Tavares for example will be the face on tons of ads in Toronto and Canada.

Tampa has the weather and shiny beaches and possibly less media pressure. In places like Toronto or NYC you can make a lot of money on the side though.

 

[LT]

People realize income tax is not the only kind of tax, right? If you adjust the salary cap per team for income tax, why not property tax as well? Or sales tax? Or just generic cost-of-living?

What about the endorsement potential for major cities or more famous franchises? Where’s the adjustment there?

These things are far more complex than being portrayed here. There are plenty of pro’s and con’s to most every franchise. Some franchises may lean toward one direction, but that’s the nature of business when it’s spread across nearly the entirety of two countries.

Adjusting the cap for any team-specific measure opens a giant can of worms that the owners and players will never be able to agree upon. Look at how difficult it is for them to come up with agreements in the current arrangement. And people want to add even more complexity to it just so they percieve the various franchises’ abilities to court free agents as the same?