Marc Methot saving 1.4 million dollars.

[zizbuka]

The whole SYSTEM needs an overhaul, not just taxes.

The one good thing that came out of the pandemic was all of us finally realizing how corrupt America is and the entire system is designed to line the pockets of the rich and eliminate the middle class.

I mean in some backwards ass way the rich made more money in 2020 than they ever had while the rest of us suffered. I don't get how that happened.

And Jeff Bezos got a $30M stimulus check..........

 

[ACLEVERNAME]

The whole SYSTEM needs an overhaul, not just taxes.

The one good thing that came out of the pandemic was all of us finally realizing how corrupt America is and the entire system is designed to line the pockets of the rich and eliminate the middle class.

I mean in some backwards ass way the rich made more money in 2020 than they ever had while the rest of us suffered. I don't get how that happened.

What?

 

[zizbuka]

Player A, signs a 5 year $25M contract. The structure is that they player gets paid $1M in salary, and $4M in bonus paid on July 1st. This player lives in Dallas.

Player B, signs a 5 year $25M contract. It's all salary. $5M a year in salary. This player lives in Dallas.

Player A, will make more money. This is because $4M is taxed at the federal rate, and half (in reality slightly less than half) the salary will be subjected to the jock tax around the league. Player B will be taxed on his full salary of $5M in cities.

Is there more to it than that? I know my bonus and profit sharing are taxed at a higher rate federally.

 

[SnuggaRUDE]

Is there more to it than that? I know my bonus and profit sharing are taxed at a higher rate federally.

Your bonus and profit sharing are subject to higher witholding, but they're taxed at the same rate as the rest of your income. Unless you're compensated in an unusual way.

 

[TCNorthstars]

It is just as simple to have the cap apply to player income, as opposed to team payroll. Whether you think the current system "works" or not depends more on whether you are getting screwed by it or not.

How is it just as simple? How are you going to get that AGI before the season and the salaries are paid? How are you going to account for movement between the Ahl/Nhl or trades or injuries where the player is rehabbing at home rather rather than playing in California?

 

[DudeWhereIsMakar]

An example of a tax-cap for NHL teams. Vegas is the one team that totally took advantage of the opportunity.

 

[DistantThunderRep]

There's certainly a lot of differences between players depending on where they live during the season/the offseason/what cities and states they play in/how long they spent in each one/bonuses, etc, even for players on the same team. But I think there's more to the idea of jock taxes than what it seems on the surface. Theoretically a player is taxed for what he earns in a state/city with a jock tax based on the number of days he's there, but there's a lot of anecdotal accounts that seem to suggest the difference between players who reside in states with and without taxes might be greater than this calculation would suggest. I do wonder how players account for travel and off-days between games and whether game days only end up being taxed in the grand scheme of things.

I dont really care about the implications for league parity, it's just lind of interesting how complicated this all can get. I've heard of 400 page returns and accounts of in-season vacations to Florida saving 20K in taxes.

Players are paid per game, so off days or travel days arent paid, I think. But there tons of tax exploits athletes and rich people use. But the huge discrepancy people talk about on HF and cry about simply isn't as much as people think.

 

[DistantThunderRep]

Is there more to it than that? I know my bonus and profit sharing are taxed at a higher rate federally.

How much you make matters too. But for the better part, yeah. Pretty much all NHL players and if they get a signing bonus get dumped in the highest tax bracket. If a player gets $5M signing bonus, and lives in Dallas or Tampa or Vegas, etc...they will only get taxed federally on the bonus but not state income tax. There are tons of tax rebates, write offs, etc that save players money.

 

[zizbuka]

Thanks @DistantThunderRep . The whole tax system is confusing. If I go to Philly to work, which fortunately I almost never do, I have to tell the system so they can take more taxes that day. sigh......

 

[majormajor]

How is it just as simple? How are you going to get that AGI before the season and the salaries are paid? How are you going to account for movement between the Ahl/Nhl or trades or injuries where the player is rehabbing at home rather rather than playing in California?

Here's how I'd do it: use a simple formula for estimated post-tax income and use that figure for the duration of the player's contract. It doesn't factor in day to day differences in road income because that stuff averages out across players. And it is based on NHL pay, not AHL pay, and it doesn't change regardless of trades.

Yes I know the initial estimate won't end up fully lining up with the player's actual income, given movement and road taxes and whatnot, but that doesn't matter. It only matters whether it levels the playing field (it does) and that there are as few loopholes for teams to exploit as possible (I'm not sure yet). The current system is full of loopholes (hello Tampa) so perfection shouldn't be the standard.

 

[DistantThunderRep]

Thanks @DistantThunderRep . The whole tax system is confusing. If I go to Philly to work, which fortunately I almost never do, I have to tell the system so they can take more taxes that day. sigh......

I will always advocate a good accountant. People are usually surprised the little things they can do to save on taxes.

 

[Regal]

Players are paid per game, so off days or travel days arent paid, I think. But there tons of tax exploits athletes and rich people use. But the huge discrepancy people talk about on HF and cry about simply isn't as much as people think.

I'm almost positive they're paid per day on the roster because that's why teams will use paper transactions to save daily cap space. Their salaries are divided over the days of the regular season and paid out regularly biweekly or semi-monthly.

And that's why I think there might be more to it than some people suggest. These states are are asking for taxes when the players are "working" in their states. If the player is being paid every day but can get away with claiming they're only "working" in these other states on game days, then the jock tax would only be applied to at max 41 away game days out of a 180ish day season. So a player in a non-tax state would only be taxed on less than a 1/4 of his earnings.

 

[DistantThunderRep]

I'm almost positive they're paid per day on the roster because that's why teams will use paper transactions to save daily cap space. Their salaries are divided over the days of the regular season and paid out regularly biweekly or semi-monthly.

You know what. Yeah you're right. This makes the most sense.

 

[jetsforever]

No real solution though, doesn't really matter

 

[Chrisinroch]

Is there more to it than that? I know my bonus and profit sharing are taxed at a higher rate federally.

Earnings are taxed at their marginal rate. Your bonus probably puts you into a higher bracket but only for the dollars over that bracket bottom threshold.

edit: if you’re just talking about what gets withheld from that particular bonus-heavy paycheck, the earlier poster is correct about withholding. Based on what you tell your employer (usually by filling out your W-4), the payroll system tries to estimate your withholding. If you want a different withholding amount (maybe you find you’re getting a big refund every year) you can modify this.

 

[Breakers]

Canadian teams attempt to offset this by signing bonuses.
Toronto gave Tavares $30+ million over the calendar year of when he signed his contract

and those values aren't subject to the tax described in this scenario, and money up front is greater than money tomorrow for "TVM"

so this example doesnt apply to every player. But it does outline base salary implications

 

[Troy McClure]

Methot missed a bunch of games in Dallas. Just spending that time at home in Dallas would theoretically impact his taxes as opposed to playing out-of -state. I think the jock tax situation is far more complicated than a lot of people want to make it out to be though, and I don't think the difference between certain states/provinces is as minimal as some want to believe.

This is a big factor for Methot. He spent most of his time in Dallas on IR, so he was subject to very little road game taxes of the type the person he was replying to was talking about. His savings were unusual because most everything he made was Texas income.

 

[tarheelhockey]

What artificial cap did the league institute for “parity” that Tavares was able to circumvent?

Requisite: the salary cap was not established for “parity”.

 

[OppositeLocK]

If I get a bonus on July 1 while I am living in Dallas that means that bonus get taxed in Dallas. Then say my yearly salary is 1M, when I am playing in California 1/82nds of that 1M will be taxed using California state tax rates(not the bonus i got paid on July 1)

Lot of people discussing taxes and laws who have no idea what they're talking about. Revenue Canada and the IRS are not stupid and your example is extremely simplistic. It's not as straightforward as you're making it out to be. By your logic an NHL team could just pay the entire salary upfront and have them play for $1/year.

Case law says otherwise. It depends on the circumstances and jurisdiction (US vs Canada, and which States for that matter, residency rules, and contract stipulations). Equalization is something that very often happens.

I love it that people on thia site think they know more about how much a player paid in taxes and what he would have paid than that player and his accountant. Just stupid.

Exactly.

 

[mouser]

It is just as simple to have the cap apply to player income, as opposed to team payroll. Whether you think the current system "works" or not depends more on whether you are getting screwed by it or not.

How are you "getting screwed" by it?

There's nothing preventing you from advocating for lower taxes for everyone where you live. Or even a lower tax rate exemption for hockey players only if that's so important.

 

[OppositeLocK]

Canadian teams attempt to offset this by signing bonuses.
Toronto gave Tavares $30+ million over the calendar year of when he signed his contract

and those values aren't subject to the tax described in this scenario, and money up front is greater than money tomorrow for "TVM"

so this example doesnt apply to every player. But it does outline base salary implications

Except the signing bonus is structured like salary. Tavares is not getting $70M upfront.

 

[mouser]

Canadian teams attempt to offset this by signing bonuses.
Toronto gave Tavares $30+ million over the calendar year of when he signed his contract

and those values aren't subject to the tax described in this scenario, and money up front is greater than money tomorrow for "TVM"

so this example doesnt apply to every player. But it does outline base salary implications

You may want to review the definition of "calendar year".

 

[Breakers]

You may want to review the definition of "calendar year".

sorry fiscal

 

[Breakers]

Except the signing bonus is structured like salary. Tavares is not getting $70M upfront.

when did I say he was
[mod]
and no they aren’t structured the same

 

[TeddyBare]

Except the signing bonus is structured like salary. Tavares is not getting $70M upfront.

In the example Marc Methot is using in his his twitter comment they absolutely are not.