Flaw in League salary cap structure

[Ace88*]

I don't the exact specifics of it, but I can say this re: income tax.

I work with someone whose nephew plays for Colorado, and owns a residence in Windsor, and splits his time off season at a house he owns in Denver and Windsor, and is a Cdn citizen. He has to play income tax in every state/province that he plays in.

Yeah this is how i thought it worked too. So let's say a player's salary is $2 million a year, he'll get a biweekly paycheque based on that. But if he plays games in Florida, then Texas, then California, then back to Toronto over the pay period, his paycheck will be different than if he had played games in Toronto, then Montreal, then Boston, then New York. I might be wrong, im just assuming it works like any other salary and they either get a monthly or a biweekly check/direct deposit.

 

[Cams]

Yeah this is how i thought it worked too. So let's say a player's salary is $2 million a year, he'll get a biweekly paycheque based on that. But if he plays games in Florida, then Texas, then California, then back to Toronto over the pay period, his paycheck will be different than if he had played games in Toronto, then Montreal, then Boston, then New York. I might be wrong, im just assuming it works like any other salary and they either get a monthly or a biweekly check/direct deposit.

I just couldn't imagine doing a tax return like that!

 

[rrc1967]

Does anybody else think the league's CBA is flawed by the differences in income tax in te league? If every team is limited to the same Salary Cap would it not make sense for the Cap to be adjusted in each market to account for the differences in income tax?

hard to say because the rules are so complex. these aren't personal taxes, but most likely incorporated entities that are getting paid.

secondly, with the falling canadian dollar, that tends to offset the variation in taxation.

edit: at least in canada, players are employed by the member club - and treated as employees.

edit 2: i wonder how they get around workplace safety issues surrounding headgear / face shields,etc???

 

[Ace88*]

Oh im sure every team has a a group of accountants to take care of all that

 

[ACC1224]

Oh im sure every team has a a group of accountants to take care of all that

I doubt the Team is making source deductions.

 

[rrc1967]

Tax is based on residency in almost every country but not in the U.S., where it's based on Citizenship. In Canada, a person is deemed a resident if they are within the country for more than 183 days ever year.

with the united states it's a rolling average of 132 days over the past three years as "a significant presence in the united states"

so even if you are canadian or american, if you are residing in the united states for more than 132 days in a year you pay the IRS.

 

[rrc1967]

I doubt the Team is making source deductions.

since the players are employees of the team i believe they would have to.

 

[ACC1224]

since the players are employees of the team i believe they would have to.

Wouldn't they be viewed as Independant Contractors?

 

[Steve]

Luongo is laughing now.... well, harder than he was before.

 

[Steve]

Yeah this is how i thought it worked too. So let's say a player's salary is $2 million a year, he'll get a biweekly paycheque based on that. But if he plays games in Florida, then Texas, then California, then back to Toronto over the pay period, his paycheck will be different than if he had played games in Toronto, then Montreal, then Boston, then New York. I might be wrong, I'm just assuming it works like any other salary and they either get a monthly or a biweekly check/direct deposit.

I apologize b/c this is very vague but I heard maybe 2 months ago how this works and perhaps someone can fill in the blanks.

The player will pay taxes based on the city he plays for ie. New York/Toronto only. Although the NHL is technically registered as an "American" company Canadian teams players pay Canadian taxes.

There is a clause in there that prevents someone who plays for Vancouver (for example) from buying a residence in Florida and claiming that as their primary or permanent residence. It has something to do with either the length of the playing schedule or a requirement of living in that city for a specific period of time. (Or something along those lines) The professional sports leagues are required to exceed whatever that number is by 1 day... forcing them to pay the tax in their respective playing cities.

Golf players, however, will take up residence in Florida and claim taxes there because they travel and don't have a home team/base to play from.a

EDIT - In summary, yes, what the OP said makes a lot of sense.

 

[Ace88*]

I apologize b/c this is very vague but I heard maybe 2 months ago how this works and perhaps someone can fill in the blanks.

The player will pay taxes based on the city he plays for ie. New York/Toronto only. Although the NHL is technically registered as an "American" company Canadian teams players pay Canadian taxes.

There is a clause in there that prevents someone who plays for Vancouver (for example) from buying a residence in Florida and claiming that as their primary or permanent residence. It has something to do with either the length of the playing schedule or a requirement of living in that city for a specific period of time. (Or something along those lines) The professional sports leagues are required to exceed whatever that number is by 1 day... forcing them to pay the tax in their respective playing cities.

Golf players, however, will take up residence in Florida and claim taxes there because they travel and don't have a home team/base to play from.

That makes a lot of sense. I guess the playing schedule is long enough that the residency rule of 183 days (in canada at least) makes it so that even if a player lives somewhere else in the offseason they still pay the taxes for whatever province their team is in.

 

[gabeliscious]

the tax thing is a valid point but on the flip side the endorsement opportunities in toronto are probably >>>>>>>>>>>>>>>>>>> places like florida or other lower tax american states. ffs even domi and tucker can get endorsement deals in this city.

 

[rrc1967]

Wouldn't they be viewed as Independant Contractors?

i originally thought so, but the SPC specifically states that the team employs the player.

 

[Bluelines]

These are grown men lol, most of whom I'm sure have personal accountants. If I'm a broke 20 year old and fully know and understand the taxation differences in Canada and the States, why wouldn't a millionaire making a career decision?

The same reason why some of these guys make tens' of millions of dollars only to be bankrupt a few years later... these guys don't have to know money like you or me, they live in a different world.

 

[StatsNightHero]

First, you don't appear to know what 'subjugate' means. Second, the league doesn't dictate income tax - governments do. How would your little idea work if the government (at whichever level) were to raise income taxes during a season?

I'm well aware that the NHL doesn't decide income tax.... if you weren't so fixated on trying to belittle everyone else on the board you would probably have realized that. My "little idea" would have everyone in the league being taxed by the same rate, that rate can be adjusted as the governments adjust income tax. I'm an Arts student and even I can see there is an issue here... I'm sure the league's numerous professional accountants could find a way to get it done.

And yes players might be able to get better endorsement deals in Toronto than some other markets but I would imagine that only applies to a limited number of players (usually the stars). I can't see Bolland taking a paycut to play in Toronto because of the endorsement opportunities.

 

[Jeebs]

I'm well aware that the NHL doesn't decide income tax.... if you weren't so fixated on trying to belittle everyone else on the board you would probably have realized that. My "little idea" would have everyone in the league being taxed by the same rate, that rate can be adjusted as the governments adjust income tax. I'm an Arts student and even I can see there is an issue here... I'm sure the league's numerous professional accountants could find a way to get it done.

And yes players might be able to get better endorsement deals in Toronto than some other markets but I would imagine that only applies to a limited number of players (usually the stars). I can't see Bolland taking a paycut to play in Toronto because of the endorsement opportunities.

The NHL can't tax anyone. Only the government has the power to tax and it would be illegal for the NHL to set up a system like this. If you did manage to come up with a system that accomplished your idea but was distinct enough not to be labled a tax then you'd also have to get the NHLPA to agree with it and I find that extremely unlikely.

This doesn't seem like a real problem to me anyways. Many of the recent successful teams are in some of the highest taxed states in America.

This just looks like inventing issues that don't really exist and aren't really affecting anyone.

Heck, Edmonton which has a lower provincial tax rate than a lot of American states still can't get anyone to sign there. It would seem that there are other more important factors that go into a players reasons for picking a team to sign with.

 

[HamiltonNHL]

Does anybody else think the league's CBA is flawed by the differences in income tax in the league?

Profession Hockey players might be allowed to incorporate.
If so, Canada might have lower taxes.

It would be interesting to know if players on Canadian teams pay more tax.

Cool idea.

Of course the biggest "tax" by signing in Toronto is the 47 year history of LoserDom, and a media that will make you want to kill yourself.

First, you don't appear to know what 'subjugate' means.

Calm down, he obviously meant subject.

 

[StatsNightHero]

The NHL can't tax anyone. Only the government has the power to tax and it would be illegal for the NHL to set up a system like this. If you did manage to come up with a system that accomplished your idea but was distinct enough not to be labled a tax then you'd also have to get the NHLPA to agree with it and I find that extremely unlikely.

This doesn't seem like a real problem to me anyways. Many of the recent successful teams are in some of the highest taxed states in America.

This just looks like inventing issues that don't really exist and aren't really affecting anyone.

Heck, Edmonton which has a lower provincial tax rate than a lot of American states still can't get anyone to sign there. It would seem that there are other more important factors that go into a players reasons for picking a team to sign with.

I'm not saying this is the reason why the Leafs suck but I think it is a factor that has been over looked. Yes, there are plenty of reasons players choose certain teams to play for (besides the take home money) but to say this issue doesn't exist is being close minded. There are low budget teams that have had success but that doesn't mean a team's budget is irrelevant when it comes to winning...

Toronto has made some seriously ****ed up decisions from a hockey operations standpoint which is obviously the main contributor to the team's performance.

What really frustrates me about this is that Leafs fans (again, among other teams) are often picking up the bill for players to go to these teams.

 

[Jeebs]

I'm not saying this is the reason why the Leafs suck but I think it is a factor that has been over looked. Yes, there are plenty of reasons players choose certain teams to play for (besides the take home money) but to say this issue doesn't exist is being close minded. There are low budget teams that have had success but that doesn't mean a team's budget is irrelevant when it comes to winning...

Toronto has made some seriously ****ed up decisions from a hockey operations standpoint which is obviously the main contributor to the team's performance.

What really frustrates me about this is that Leafs fans (again, among other teams) are often picking up the bill for players to go to these teams.

I can understand your frustration and I share it. But I'm not sure what bill it is you're referring to that Leafs fans are paying? Your second paragraph is what you should be focusing on because unless you vote someone in that's going to eliminate income taxes, there's not really much you, the NHL, or any team can do about that.

 

[StatsNightHero]

I can understand your frustration and I share it. But I'm not sure what bill it is you're referring to that Leafs fans are paying? Your second paragraph is what you should be focusing on because unless you vote someone in that's going to eliminate income taxes, there's not really much you, the NHL, or any team can do about that.

Sorry, I realize my statement about "picking up the bill" is quite vague. I'm also aware there's no simple solution (if there was, we wouldn't even be having this discussion). I'll try to clarify.

When I say "pick up the bill", I mean teams that consistently lose money, pay parts of their player's salaries (albeit, indirectly) with the revenue generated from markets such as Toronto (I'm not trying to insult your intelligence, you probably realize this). The problem I have with this is that some of those teams (Florida for example) are indirectly using the revenue generated by Toronto to get more bang for their buck then Toronto (a market supplying a large quantity of the money) can because of income tax

Hopefully this helps^. Again, I know there is no simple solution. The reason I made the post (besides to vent, of course) was to shed light on the issue. Hopefully it is something that will be discussed in the next CBA.

 

[Ace88*]

Profession Hockey players might be allowed to incorporate.
If so, Canada might have lower taxes.

It would be interesting to know if players on Canadian teams pay more tax.

Cool idea.

Of course the biggest "tax" by signing in Toronto is the 47 year history of LoserDom, and a media that will make you want to kill yourself.


Calm down, he obviously meant subject.

im not 100% sure but i believe players can incorporate themselves if they use their name as a brand--ie, michael jordan, sidney crosby, stephon marbury, etc.

 

[ULF_55]

im not 100% sure but i believe players can incorporate themselves if they use their name as a brand--ie, michael jordan, sidney crosby, stephon marbury, etc.

I believe anyone can create their own corporation and be sole shareholder. IT professionals do it all the time, but it is up to the employer whether he'll contract you or wants you to be an employee.

You can be both at the same time.

 

[HoweHullOrr]

The taxes in New Jersey are much higher than Texas. Have the Stars won the Cup or done better than the Devils because of this?

The impact of the foreign currency exchange would impact a small market Canadian more I'd think.

Ticket prices are also related to market demand. In Toronto, ticket prices are high because market demand is high.

The Leafs have deep financial resources, but you'd never know it given their dismal record. They have nobody to blame but themselves.

 

[Tie Domi Esquire]

no cap for management, this will be useful when Shanny has a chat with Babcock.

 

[HoweHullOrr]

with the united states it's a rolling average of 132 days over the past three years as "a significant presence in the united states"

so even if you are canadian or american, if you are residing in the united states for more than 132 days in a year you pay the IRS.

Similarly if you are a U.S. citizen and you work over a certain number of days in Canada, you will have to pay Canadian taxes.