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 how would you fix the salary cap? [message #742004]
Wed, 28 August 2019 16:25 Go to next message
Dragon_Matt  is currently offline Dragon_Matt
Messages: 89
Registered: January 2009
Location: edmonton

No Cups

How do you create a fair playing field for all teams, given that taxes work very differently in just about every single team's market? Canada vs the USA. Edmonton vs Ottawa. Minnisota vs Tampa Bay?

2019 Canada federal taxes - https://www.canada.ca/en/revenue-agency/services/tax/individ uals/frequently-asked-questions-individuals/canadian-income- tax-rates-individuals-current-previous-years.html#federal

2019 Alberta Income tax - https://www.taxtips.ca/taxrates/ab.htm

Florida - Florida State Tax: Florida does not have a state income tax
USA - https://www.bankrate.com/finance/taxes/tax-brackets.aspx

Let's compare Edmonton to Tampa Bay and we'll only worry about the top tier tax brackets... because they're all greedy millionaires.

Alberta has a 15% top tier tax bracket, and Canada has a 33% top tier income tax bracket.
Florida has no state tax, but a 33% top tier federal income tax bracket.

That's a, 11% difference. If you'd signing an 8 million dollar a year deal, you get $880,000 more per year in your pocket.

That's a pretty significant incentive to play down south... not to mention you live in Florida.

Is it possible to find a level playing field? How would you do it?



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 Re: how would you fix the salary cap? [message #742005 is a reply to message #742004 ]
Wed, 28 August 2019 16:31 Go to previous messageGo to next message
Adam  is currently offline Adam
Messages: 11811
Registered: August 2005
Location: Edmonton, AB

6 Cups

Leave it as is. There's no good way to correct for taxes, and taxes aren't stable anyhow, so it would get hopelessly complicated coming up with a formula that keeps it always in balance (not to mention, a change in tax code mid-season could impact what a team had available for cap space).

Ultimately the difference is only a few percentage points from top to bottom, and overall dollars is only one factor when a player is choosing his team. The Rangers have never struggled to sign players, even though they're in one of the highest tax jurisdictions.

This probably means if you're Edmonton, you need to have a good team to be competitive for free agents, but that's fine. I don't mind there being pressure on management not to suck, and I would prefer we're unable to land expensive UFAs when we DO suck - since they're unlikely to play to their contract value anyhow.



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 Re: how would you fix the salary cap? [message #742008 is a reply to message #742004 ]
Wed, 28 August 2019 16:36 Go to previous messageGo to next message
CrusaderPi  is currently offline CrusaderPi
Messages: 9555
Registered: December 2003
Location: AB Highway 100

6 Cups

Equity of outcome is impossible. It's not the NHL's place to set taxes for their franchise's locations. Don't like it? Cheer for Tampa and enjoy your socialized health care.


This is fine.

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 Re: how would you fix the salary cap? [message #742017 is a reply to message #742004 ]
Wed, 28 August 2019 18:18 Go to previous messageGo to next message
Xombie  is currently offline Xombie
Messages: 968
Registered: March 2004
Location: E-Town

No Cups

What if for cap hit the take-home pay is the only part that counts against the cap? Like the announced salary numbers are what the player gets, and the tax is calculated after cap. So whether it's Florida or Alberta, guy signs for 5 mill, and the rich billionaire owners pay the tax. So then the owners are the ones penalized for location. Katz pays 5 mill plus whatever the tax on that, but we fans only hear and care about the 5 mill cap hit. Florida owner keeps more of his money but that's the cost of doing business.

Also what if there was no front or backloading of contracts? Like you sign 5 years and want 30 mill, you're gonna get 6 mill every year. No more of this first year 22 mill, then 2 mill the other 4 years malarkey.

This might mean no more performance or signing bonuses. Those are just cap circumvention tools anyway.



Bob Marley and the (Hartford) Wailers.

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 Re: how would you fix the salary cap? [message #742022 is a reply to message #742017 ]
Wed, 28 August 2019 19:06 Go to previous messageGo to next message
bigEfromGP  is currently offline bigEfromGP
Messages: 1531
Registered: July 2006
Location: GP, AB

1 Cup

Income tax only tells part of the story. Property taxes in some US cities are extremely high compared to most Canadian cities (like +$40k/year for a $1MM house). Doesn't completely erase the difference obviously but just one more aspect to consider.


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 Re: how would you fix the salary cap? [message #742031 is a reply to message #742022 ]
Wed, 28 August 2019 21:14 Go to previous messageGo to next message
PlusOne  is currently offline PlusOne
Messages: 2177
Registered: July 2006
Location: Regina, Sask

2 Cups

bigEfromGP wrote on Wed, 28 August 2019 19:06

Income tax only tells part of the story. Property taxes in some US cities are extremely high compared to most Canadian cities (like +$40k/year for a $1MM house). Doesn't completely erase the difference obviously but just one more aspect to consider.


I have been arguing this side of it for years so thanks for bringing it up. There are a pile of factors that play into the end result, or disposable income.

Also, it has been mentioned recently in another thread but it isnt as simple as the example given of "That's a, 11% difference. If you'd signing an 8 million dollar a year deal, you get $880,000 more per year in your pocket."
Each player pays taxes where they play the game. So for a TB player 41 games would be taxed at that rate but 41 would be taxed at variable rates.

Trying to account for that would be a nightmare regardless of the system.

I have a handful of acquaintances that have played in the NHL and one in the NFL. I see why some get ripped off by financial managers. A couple had a grasp on things but a couple others had zero idea where the money went and how they paid taxes, etc.



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CrusaderPi wrote on Wed, 23 October 2019 08:54

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 Re: how would you fix the salary cap? [message #742033 is a reply to message #742004 ]
Wed, 28 August 2019 22:17 Go to previous messageGo to next message
Pseudoreality  is currently offline Pseudoreality
Messages: 569
Registered: December 2002
Location: Yellowknife

No Cups

Well, considering the Oilers have been in the toilet for all but 2 of 13 years the NHL has had a salary cap, I can't say I'm a huge fan. I much prefer teams to have budgets and paid players based on the revenue they generated, not just blindly spend to the cap and then ask taxpayers to fund their arenas. If you are really concerned about rich teams spending way more, well then put in a progressive luxury tax that gets redistributed like a reverse escrow.

I wouldn't do anything about differences in income tax rates across North America. Sure they can be higher in Canada, but then the players are paid in US dollars in Canada and outside of Tor/Van, it's cheap to live.



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 Re: how would you fix the salary cap? [message #742035 is a reply to message #742033 ]
Wed, 28 August 2019 22:22 Go to previous messageGo to next message
smyth260  is currently offline smyth260
Messages: 1864
Registered: November 2007

1 Cup

Pseudoreality wrote on Wed, 28 August 2019 21:17

Well, considering the Oilers have been in the toilet for all but 2 of 13 years the NHL has had a salary cap, I can't say I'm a huge fan. I much prefer teams to have budgets and paid players based on the revenue they generated, not just blindly spend to the cap and then ask taxpayers to fund their arenas. If you are really concerned about rich teams spending way more, well then put in a progressive luxury tax that gets redistributed like a reverse escrow.

I wouldn't do anything about differences in income tax rates across North America. Sure they can be higher in Canada, but then the players are paid in US dollars in Canada and outside of Tor/Van, it's cheap to live.



Oilers have spent to the cap every year, except for McDavid's third season when they traded Jordan Eberle for cap space.



Clean house or bust

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 Re: how would you fix the salary cap? [message #742041 is a reply to message #742035 ]
Thu, 29 August 2019 08:17 Go to previous messageGo to next message
RDOilerfan  is currently offline RDOilerfan
Messages: 4819
Registered: January 2016

4 Cups

I don't think there is a way to fix it. As was mentioned, yes here is tax disparity across the 2 countries but there is also disparity between provinces and states. So if you are trying to make it fair because of the tax disparity, you'd almost have to have a separate salary cap depending on where the team was located. Florida teams would get a certain cap, New York teams a different one, Alberta teams a different one, etc. So it wouldn't work.




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 Re: how would you fix the salary cap? [message #742043 is a reply to message #742004 ]
Thu, 29 August 2019 08:26 Go to previous messageGo to next message
CrudeRemarks  is currently offline CrudeRemarks
Messages: 1257
Registered: November 2010
Location: Edmonton

1 Cup

What if there was an even up the following year. So teams' post-tax salaries were determined and if you were below the average then you get that as a bonus the following year and if you were above you get a penalty.


You can't always get what you want, but if you try sometimes, you just might find, you can get a lottery pick.


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 Re: how would you fix the salary cap? [message #742045 is a reply to message #742043 ]
Thu, 29 August 2019 08:40 Go to previous messageGo to next message
RDOilerfan  is currently offline RDOilerfan
Messages: 4819
Registered: January 2016

4 Cups

CrudeRemarks wrote on Thu, 29 August 2019 08:26

What if there was an even up the following year. So teams' post-tax salaries were determined and if you were below the average then you get that as a bonus the following year and if you were above you get a penalty.


Interesting idea. I do agree the disparity of taxes is a problem. Kucherov won the scoring title last season and is a 9.5 mill cap hit. But with the disparity in taxes, if he was somewhere else, I bet his cap hit would be way higher. Add 2 mill to his cap hit somewhere else and. Go down the list of Tampa's guys. Hedman is a Norris guy who signed in 2016 for 7.875 mill. He's under paid cap hit wise. I bet if he was somewhere else, add 2 mill to his deal. So while Tampa has been run relatively well, they also have a big advantage. I really doubt the players care what their cap hit is, they just want their take home to be on par with other players they feel they in the same category with.

[Updated on: Thu, 29 August 2019 08:46]


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 Re: how would you fix the salary cap? [message #742065 is a reply to message #742004 ]
Thu, 29 August 2019 13:23 Go to previous message
mightyreasoner  is currently offline mightyreasoner
Messages: 2965
Registered: October 2005
Location: Edmonton

2 Cups

A few years ago, Alberta had one of the most favourable tax brackets in the NHL and the Oilers just wasted it with awful teams. How can I get upset with teams who have that advantage now and actually use it well?

https://www.canadianbusiness.com/blogs-and-comment/how-the-f iscal-cliff-might-give-canadian-nhl-teams-a-boost/amp/

I tend to think that most markets have a "selling point" that they can leverage, and the good managers know how to do that well. I truly am not worried, I think the salary cap has been successful overall. There is parity around the league and it reward competent management who know when to go for it and when to plan for the future.

[Updated on: Thu, 29 August 2019 13:28]


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