The NHL needs to implement a uniform tax policy

[Matt_T83]

I'm starting to get a little disinterested in the NHL, mostly because Canadian teams in general are getting screwed (unless they happen to draft VERY well). 

 

Someone mentioned that Erik Karlsson probably all the Canadian teams on his "no trade" list, and that's sadly pretty common. For every John Tavares that comes to play in his home town, there are dozens of other NHL players that put all the Canadian teams on their "no-go" lists. This happens for a variety of reasons, but I believe the primary reason is starting to become obvious: money. Specifically I am talking about income tax, which can be considerably lower in some of the US states.

 

I think the NHL need to come up with a uniform method for handling taxes, so as to not give certain teams advantages simply because players can make more take-home income by playing there. You do need to pay income tax locally -- however, I would suggest the NHL players should pay for taxes as a whole. In other words, all players commit a certain amount of pay to an escrow account, and income tax is paid out from that account as a whole. In other words, every single NHL player pays the same income tax rate, which is an average from across the league. Each tax is then paid directly to the appropriate government from this NHL escrow account on behalf of the player, and the player can then proceed with the normal process of tax write-offs, etc.

 

There are still going to be differences -- as some players will have more or less taxes officially paid on their salary, and some players could therefore earn more money with clever tax write-offs. However, as a whole each player pays the same % of their salary in tax, and no team can advertise "you get taxed less here". 

[wallstreetamigo]

2 minutes ago, Matt_T83 said:

I'm starting to get a little disinterested in the NHL, mostly because Canadian teams in general are getting screwed (unless they happen to draft VERY well). 

 

Someone mentioned that Erik Karlsson probably all the Canadian teams on his "no trade" list, and that's sadly pretty common. For every John Tavares that comes to play in his home town, there are dozens of other NHL players that put all the Canadian teams on their "no-go" lists. This happens for a variety of reasons, but I believe the primary reason is starting to become obvious: money. Specifically I am talking about income, which can be considerably lower in some of the US states.

 

I think the NHL need to come up with a uniform method for handling taxes, so as to not give certain teams advantages simply because players can make more take-home income by playing there. You do need to pay income tax locally -- however, I would suggest the NHL players should pay for taxes as a whole. In other words, all players commit a certain amount of pay to an escrow account, and income tax is paid out from that account as a whole. In other words, every single NHL player pays the same income tax rate as every other player, which is an average from across the league. Each tax is then paid directly to the appropriate government from this NHL escrow account on behalf of the player, and the player can then proceed with the normal process of tax write-offs, etc.

 

There are still going to be differences -- as some players will have more or less taxes officially paid on their salary, and some players could therefore earn more money with clever tax write-offs. However, as a whole each player pays the same % of their salary in tax, and no team can advertise "you get taxed less here". 

A good idea in theory, incredibly difficult to implement based on the tax codes in Canada and the U.S. though. 

 

The NHL has zero interest in implementing such a system though. The teams it helps are ones they have a lot of interest in doing well.

 

Its an advantage like any other. Its no different than the lifestyle advantage of west coast teams, the metro advantage of new york teams, the center of the hockey universe and media advantages of Toronto, etc.

 

I agree with you in theory but see no appetite for the NHL to do anything here. 

[nuckin_futz]

I agree that the NHL needs to implement a "uniform" tax policy.

 

 

These eye sores should be taxed out of existence.

 

[goalie13]

I like the outside-the-box thinking.  I am no accountant, and I see what you are getting at, but I can't see how that would realistically work.

 

The problem I see is that if the money was collected by the league or the PA, and then distributed to the players to pay their taxes, would that not also count as income?  And then that income would be treated differently from one jurisdiction to another?

 

Plus, if I am not mistaken, some jurisdictions tax based on where the game is played, so even the visiting players get dinged.  It would just get too complicated to administer, and players already hate escrow as it is.

[Rob_Zepp]

8 minutes ago, Matt_T83 said:

I'm starting to get a little disinterested in the NHL, mostly because Canadian teams in general are getting screwed (unless they happen to draft VERY well). 

 

Someone mentioned that Erik Karlsson probably all the Canadian teams on his "no trade" list, and that's sadly pretty common. For every John Tavares that comes to play in his home town, there are dozens of other NHL players that put all the Canadian teams on their "no-go" lists. This happens for a variety of reasons, but I believe the primary reason is starting to become obvious: money. Specifically I am talking about income tax, which can be considerably lower in some of the US states.

 

I think the NHL need to come up with a uniform method for handling taxes, so as to not give certain teams advantages simply because players can make more take-home income by playing there. You do need to pay income tax locally -- however, I would suggest the NHL players should pay for taxes as a whole. In other words, all players commit a certain amount of pay to an escrow account, and income tax is paid out from that account as a whole. In other words, every single NHL player pays the same income tax rate, which is an average from across the league. Each tax is then paid directly to the appropriate government from this NHL escrow account on behalf of the player, and the player can then proceed with the normal process of tax write-offs, etc.

 

There are still going to be differences -- as some players will have more or less taxes officially paid on their salary, and some players could therefore earn more money with clever tax write-offs. However, as a whole each player pays the same % of their salary in tax, and no team can advertise "you get taxed less here". 

Why stop there?   Why not normalize the price of housing for them, the cost of private education for their children, fuel costs, airfares for family, snow days, ticket prices for games (so revenue same from the attendance which will also be normalized) etc. etc.

 

Fact of life is the cost of living varies around the continent just as the weather, closeness to family, proximity to certain attractions etc. etc.   The "significantly lower" income tax is overblown in that all players pay Federal tax in the US and while there is a difference state-to-state, it probably makes less of a difference in many locations as those teams don't tend to spend to cap due to revenues that are lower.   Look at Canadian city advantage in that regard - Leafs have near highest marginal tax rate jurisdiction in entire NHL but their revenues will be sky high too.  Same with Rangers.   

 

Until recently, and I have no idea what your new NDP government in BC has planned, the marginal tax rates in Alberta and BC were more than comparable with California and New York if you compare apples and apples (medical insurance etc.).   Florida is the true anomaly over the past years but now Nevada too but have not noticed any of those three teams taking away players from other teams to the degree that needs a likely unlawful taxation strategy.

 

What player do you feel your team lost out on due to this....clearly that is a motivator here.   

[rekker]

I hear you but doubt anything can be done. Is what it is. In the meantime I have my own opinions on some of the GM's and accolades placed on them. Yzerman gets way too much credit in my opinion. His ability to re-sign players cheaper where taxes are lowest and the beaches are finest is not difficult. On the flip side I give a guy like Cheveldayoff full credit for re-signing players and building a team in a city like Winnipeg. No offence to Winnipeg but not tough to sell Tampa over Winnipeg to a single dude, or a millionaire wife and family. 

[rekker]

2 minutes ago, Rob_Zepp said:

Why stop there?   Why not normalize the price of housing for them, the cost of private education for their children, fuel costs, airfares for family, snow days, ticket prices for games (so revenue same from the attendance which will also be normalized) etc. etc.

 

Fact of life is the cost of living varies around the continent just as the weather, closeness to family, proximity to certain attractions etc. etc.   The "significantly lower" income tax is overblown in that all players pay Federal tax in the US and while there is a difference state-to-state, it probably makes less of a difference in many locations as those teams don't tend to spend to cap due to revenues that are lower.   Look at Canadian city advantage in that regard - Leafs have near highest marginal tax rate jurisdiction in entire NHL but their revenues will be sky high too.  Same with Rangers.   

 

Until recently, and I have no idea what your new NDP government in BC has planned, the marginal tax rates in Alberta and BC were more than comparable with California and New York if you compare apples and apples (medical insurance etc.).   Florida is the true anomaly over the past years but now Nevada too but have not noticed any of those three teams taking away players from other teams to the degree that needs a likely unlawful taxation strategy.

 

What player do you feel your team lost out on due to this....clearly that is a motivator here.   

Only true way to even the playing field is to control what you can control. Drafting well and smart player asset management is the true answer. 

[Duodenum]

Much better and easier to implement than a tax is to calculate individual team's salary cap based on their local tax rates (ie. teams in higher tax zones have a higher salary cap).

It'll never be implemented though. 

[cdubuya]

maybe Canada needs to implement less stringent income tax policy

[peaches5]

The only way I could see it working is if the cap hit was based off salaries after tax was deducted.

[VanGnome]

It's not the leagues purview to dictate taxation of salaries. That's a federal/state/provincial purview, and rightly so, the NHL is an employer just like any other, technically speaking the leagues franchises are employers, just like anyone else, thus their payroll adherence must conform to the jurisdiction in which they operate.

If you think about it, this is a very 1%/1st world problem to try and address, and the only way to address it is to ensure that every state, every province in USA and Canada conform to the same tax code. That is NEVER going to happen, and will negatively impact WAY MORE people than the small minority who get paid millions to play hockey for a living.

This is just one of those things we have to live with, it is what it is and that won't change any time soon. Certain teams might have an advantage when it comes to income taxes, but if you think about it that's more of a reflection of the player themselves vs how unfair of an advantage it is for other teams. Instead of choosing the best fit, some players choose where they will make the most money, there will always be people like that in the world, and really would you want someone like that on your team?

I would also say that those who choose the money over the game itself and let that dictate where they will go... they are a minority of a minority. Yeah EK is a high level elite player, but one player doesn't make a team. I'd rather have 3 defencemen 50% as good as EK for the price of 1 EK if character is suspect and money is his motive. Think about it, if EK was such a high class individual, why would he not have worked with OTT on getting the 8x11? He wanted out of Ottawa even after they got rid of the problem in Hoffman, who they could have kept and just traded EK. Now they have neither, and will end up with absolute crap in return for both.

[DontTouchMeGuys]

While this is an innovative idea. There may be two issues:

 

1.) Is there a way to ensure that there are enough funds in this escrow account to satisfy taxes for over 700 players? Let's say everyone is required to contribute 10 % of their annual salary to this account, how will the NHL know that this is sufficient to satisfy their debts?

 

2.) a player earning $500,000 annual salary that must contribute the same amount to this escrow account as Tavares and his  15 million annual salary may not be fair to the lesser earner. So I can see a lot of 3rd and 4th liners not like this system, there's no evidence to suggest that they'll even save money on their personal tax returns. 

[Lancaster]

1 hour ago, goalie13 said:

I like the outside-the-box thinking.  I am no accountant, and I see what you are getting at, but I can't see how that would realistically work.

 

The problem I see is that if the money was collected by the league or the PA, and then distributed to the players to pay their taxes, would that not also count as income?  And then that income would be treated differently from one jurisdiction to another?

 

Plus, if I am not mistaken, some jurisdictions tax based on where the game is played, so even the visiting players get dinged.  It would just get too complicated to administer, and players already hate escrow as it is.

I remember when Brad Lukowich was called up to the Canucks, they mentioned that he was actually earning less money playing in the NHL than in the AHL due to taxes as he was already on a 1-way contract.  

[King Heffy]

1 hour ago, peaches5 said:

The only way I could see it working is if the cap hit was based off salaries after tax was deducted.

Good solution.

[goalie13]

1 hour ago, DontTouchMeGuys said:

1.) Is there a way to ensure that there are enough funds in this escrow account to satisfy taxes for over 700 players? Let's say everyone is required to contribute 10 % of their annual salary to this account, how will the NHL know that this is sufficient to satisfy their debts?

There's 713 roster spots.

 

With all the call-ups throughout the year, I wonder how many players play at least one game in a single season.  The Canucks had 37 players suit up for them last year.  5 were from trades.  If that was average for the league, you could be looking at over 1,000 individuals.

[Baer.]

Say byebye to teams like Florida and Arizona in that case.

[MikeyBoy44]

51 minutes ago, Baer. said:

Say byebye to teams like Florida and Arizona in that case.

Yes please 

[Tanev]

I use to work in a similar area in cross-border tax — what this sounds like is proposing a tax equalization. Essentially the Team would spot the player for the difference between the net earnings after-tax in a low jurisdiction vs the team’s location. Unfortunately this “true-up” would count against the cap unless it was specifically written into the CBA.

 

Also, yes players are taxed based on where they earn income (there are complex rules in this area). Without getting into too many details, in general, If a Canuck plays say 10 games in California (Sharks, Ducks, Kings) in a year, he would have to pay taxes on 10/82 of his salary in California state as well as pay the relevant US Federal tax. Taxes paid would be eligible for a foreign tax credit in Canada to prevent double taxation.

[Drive-By Body Pierce]

Although this is true from a tax point of view, the players in Canadian markets still get paid in US dollars. So add 20% or more (at least currently).

[Rounoush]

4 hours ago, nuckin_futz said:

I agree that the NHL needs to implement a "uniform" tax policy.

 

 

These eye sores should be taxed out of existence.