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Post by BigTed3 on Jul 24, 2024 18:51:19 GMT
The Athletic running a piece today on John Tavares and how the CRA is saying he owes 8M in extra taxes... apparently Tavares had 15M of his contract with the Leafs shifted to being a signing bonus because he (and many other players) believed it would allow for a tax loophole that allowed him to pay taxes on that amount as a US resident and not a Canadian employee. But alas, the CRA has said that's not the case and that Tavares was at heart a Canadian and spent more than half the year in Canada, therefore making him ineligible to use that loophole. The case has implications for many other athletes trying to get out of paying Canadian taxes. In the article, several tax specialists and agents are cited and make specific note that they advise clients to avoid playing in Canada if taxes are important to them. They also state that the cost of living in many Canadian cities is higher than in many of the American NHL cities. So they add that there is a double disadvantage for Canadian teams when it comes to negotiating. The bonus loophole was one way Canadian teams clawed back some of the difference, but if this type of thing is being challenged (whether it goes through or not we won't know apparently for several years), the agents feel like this will further dissuade players from wanting to play in Canada. So yet further evidence from the horse's mouth that taxes matter and that the discrepancies do play a role in players' decisions. The NHL really needs to act on this to level the playing field... The simple solution is that teams in states/provinces with higher taxes get a higher cap, but would the NHL do that? Or that the cap is based on net salary, which is what one of the agents suggested should be the case to level the playing field (basically same idea as what you suggested)... and yes, the argument that there are other differences like cost of living and sponsorship deals and so on is true, but those things are much harder to correct for, and I don't think anyone can tell me specifically what the numerical difference will be in either of those things between Nashville and San Jose and Washington and Ottawa in 2025. But income tax rates are very measurable and have been pretty consistent over the past decade (in terms of relativity to each other). They're easy to adjust for on a year by year basis. It doesn't fix the entire issue of equity, but it fixes the most glaring one, and as I've said before, regardless of whether there are loopholes a player could use, the Tavares case illustrates that players aren't able to count on these and it is the perception of significant tax differences that will cause players to sign in one place over another.
I think it's a bit dishonest to suggest this isn't an issue when we've heard from players and from agents that this is a real thing. It doesn't really matter if 50% of the players don't care, if 50% of them care very much about it and allow it to affect their decisions. If I told you that you could have $1000 now or you could have $750 with the chance to make $250 extra dollars by making some public appearances, that ain't the same thing. If I told you that you could have $1000 now or you could have $700 and submit some forms to get $300 back in 20 years after you retire, that ain't the same thing... taxes matter to players, and the more they make, the more the absolute difference.
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Post by BigTed3 on Jul 25, 2024 2:25:48 GMT
To add to the tax story, Michael Pezzetta did an interview where he said he found the taxes in Montreal shocking when he got his first NHL paycheck. He figured he would get a huge take home pay and then found out he lost 54% to taxes, 14% to escrow, and 4% to his agent and that all those things ate away into his bottom line. Now he's a guy struggling to stay in the NHL, so he'll largely take whatever spot in the league he can get, but he too says players notice what taxes do to their net pay. More evidence it's a thing.
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RCAF48
Captain Kirk
Posts: 359
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Post by RCAF48 on Jul 25, 2024 3:09:26 GMT
Taxes are always a thing but quality of life is a bigger thing. The wealth redistribution formulas floated on here would become even more interesting when trades occurred. A cap czar would need to be hired, luckily Canada has a wealth redistribution expert coming available in about a year's time...............Chrystia Freeland.
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Post by graeme on Jul 25, 2024 4:12:35 GMT
The simple solution is that teams in states/provinces with higher taxes get a higher cap, but would the NHL do that? Or that the cap is based on net salary, which is what one of the agents suggested should be the case to level the playing field (basically same idea as what you suggested)... and yes, the argument that there are other differences like cost of living and sponsorship deals and so on is true, but those things are much harder to correct for, and I don't think anyone can tell me specifically what the numerical difference will be in either of those things between Nashville and San Jose and Washington and Ottawa in 2025. But income tax rates are very measurable and have been pretty consistent over the past decade (in terms of relativity to each other). They're easy to adjust for on a year by year basis. It doesn't fix the entire issue of equity, but it fixes the most glaring one, and as I've said before, regardless of whether there are loopholes a player could use, the Tavares case illustrates that players aren't able to count on these and it is the perception of significant tax differences that will cause players to sign in one place over another.
I think it's a bit dishonest to suggest this isn't an issue when we've heard from players and from agents that this is a real thing. It doesn't really matter if 50% of the players don't care, if 50% of them care very much about it and allow it to affect their decisions. If I told you that you could have $1000 now or you could have $750 with the chance to make $250 extra dollars by making some public appearances, that ain't the same thing. If I told you that you could have $1000 now or you could have $700 and submit some forms to get $300 back in 20 years after you retire, that ain't the same thing... taxes matter to players, and the more they make, the more the absolute difference.
The problem is "net salary" isn't really a thing - from tax perspective all the money someone earns from all sources get put into one big "pot", deductions/credits are applied against it, and then that is taxed (there is "net pay" on a paycheque, but this is just estimating taxes owed and can be significantly off sometimes). Even if you come up with some sort of scheme to calculate "net salary", then how do we account for things like RCAs where someone is reducing their current income but creating a (taxable) income stream in the future? I get the idea here, I just don't see it really being workable given the complexities of the tax systems.
The other problem is the whole argument in favor of these adjustments is "fairness", but then you're just going to teams like Seattle complaining now it's biased against them since they tend to have higher taxes on everything other than income compared to most states. Another "fairness" issue is if you just adjust the cap without also adjusting revenue sharing, presumably only larger market teams will even be able to take advantage of the extra cap space.
I suspect it's the agents who really matter here - they're the ones walking the players through the pros and cons of a given offer (if players are making up their own opinions and not having agents correct them, they have bigger problems) and ideally they'll run the hard numbers. I don't think any would say taxes don't matter, although the argument Walsh has made (he has never said taxes don't matter) is that for players not planning to retire in Canada, Canada can be just as competitive as the no-tax states (the way you describe the RCAs isn't correct - the idea is you invest & compound that $300 tax-free - the magic of compound interest is a big part of the payoff) - it's the same reason many Canadians max out their RRSP every year.
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Post by graeme on Jul 25, 2024 4:22:12 GMT
To add to the tax story, Michael Pezzetta did an interview where he said he found the taxes in Montreal shocking when he got his first NHL paycheck. He figured he would get a huge take home pay and then found out he lost 54% to taxes, 14% to escrow, and 4% to his agent and that all those things ate away into his bottom line. Now he's a guy struggling to stay in the NHL, so he'll largely take whatever spot in the league he can get, but he too says players notice what taxes do to their net pay. More evidence it's a thing. No doubt taxes are a nasty surprise, but let's talk specific numbers. I think Pez started making 750k, or after 14% escrow 645k. In Quebec, that has an average tax rate of 48.84% (54% is a bit of an exageration). In a non-tax US state that has an average tax rate of 33.67%. Both countries have different deductions and other similar, but for simplicity we'll leave them out. That works out to approximately a 112k difference, probably closer to like 75k (very rough ballpark) difference after accounting for fact he'd have paid higher than 33.67% due to out of state games.
Point being, he'd probably have found the numbers nearly as shocking in the US, and while that amount isn't trivial for a player like him, it also seems unlikely to dominate all the other factors.
I don't even really dispute taxes have some impact, I just think the degree to which it's a problem is probably overstated and trying to "fix" it is a whole can of worms.
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Post by claremont on Jul 25, 2024 12:05:35 GMT
Or that the cap is based on net salary, which is what one of the agents suggested should be the case to level the playing field (basically same idea as what you suggested)... and yes, the argument that there are other differences like cost of living and sponsorship deals and so on is true, but those things are much harder to correct for, and I don't think anyone can tell me specifically what the numerical difference will be in either of those things between Nashville and San Jose and Washington and Ottawa in 2025. But income tax rates are very measurable and have been pretty consistent over the past decade (in terms of relativity to each other). They're easy to adjust for on a year by year basis. It doesn't fix the entire issue of equity, but it fixes the most glaring one, and as I've said before, regardless of whether there are loopholes a player could use, the Tavares case illustrates that players aren't able to count on these and it is the perception of significant tax differences that will cause players to sign in one place over another.
I think it's a bit dishonest to suggest this isn't an issue when we've heard from players and from agents that this is a real thing. It doesn't really matter if 50% of the players don't care, if 50% of them care very much about it and allow it to affect their decisions. If I told you that you could have $1000 now or you could have $750 with the chance to make $250 extra dollars by making some public appearances, that ain't the same thing. If I told you that you could have $1000 now or you could have $700 and submit some forms to get $300 back in 20 years after you retire, that ain't the same thing... taxes matter to players, and the more they make, the more the absolute difference.
The problem is "net salary" isn't really a thing - from tax perspective all the money someone earns from all sources get put into one big "pot", deductions/credits are applied against it, and then that is taxed (there is "net pay" on a paycheque, but this is just estimating taxes owed and can be significantly off sometimes). Even if you come up with some sort of scheme to calculate "net salary", then how do we account for things like RCAs where someone is reducing their current income but creating a (taxable) income stream in the future? I get the idea here, I just don't see it really being workable given the complexities of the tax systems.
The other problem is the whole argument in favor of these adjustments is "fairness", but then you're just going to teams like Seattle complaining now it's biased against them since they tend to have higher taxes on everything other than income compared to most states. Another "fairness" issue is if you just adjust the cap without also adjusting revenue sharing, presumably only larger market teams will even be able to take advantage of the extra cap space.
I suspect it's the agents who really matter here - they're the ones walking the players through the pros and cons of a given offer (if players are making up their own opinions and not having agents correct them, they have bigger problems) and ideally they'll run the hard numbers. I don't think any would say taxes don't matter, although the argument Walsh has made (he has never said taxes don't matter) is that for players not planning to retire in Canada, Canada can be just as competitive as the no-tax states (the way you describe the RCAs isn't correct - the idea is you invest & compound that $300 tax-free - the magic of compound interest is a big part of the payoff) - it's the same reason many Canadians max out their RRSP every year.
It would be interesting to hear agents talk about a potential neutralizing effect - the impact of how much top players can make in supplemental endorsement deals? I doubt based on hockey's popularity in the USA despite their 10 X population market, that there are lucrative endorsement deals for Ryan O'Rielly or Stamkos in Nashville, Binnington in St. Louis, Seguin in NFL Cowboy mad Dallas etc. Contrast that with Matthews or McDavid on the gambling sites, and revered hockey markets in Canada. Is it chump change and does it compensate for some tax differentials? At the end of the day, the NHLPA, and the owners voted for the cap system - there had to be a lot of advisors involved in assembling the deal, and they missed the tax impact for the poor players - shame on the union! Agree, it's not an easy fix.
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regis
Le Gros Bill
Posts: 1,095
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Post by regis on Jul 25, 2024 15:47:06 GMT
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Post by maasart on Jul 25, 2024 16:30:42 GMT
Pez, who is championed by the "average joe" may want to watch his crying. A $750,000 in Quebec is: $375,000 in the bank at the end of the year (actually a little more than that i believe). Average salary in Quebec: $49,500 which means they put about $32,000 in the bank. So he's still making what the average Joe in Quebec makes in 10 years. i understand the usefulness of talking about this stuff in terms of getting all teams in line but a whining ‘Oh my god, where’s all the money?' when he's making probably 8 or 10x what his dad made/makes is not a great look.
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Post by HTL on Jul 25, 2024 16:39:47 GMT
Pez, who is championed by the "average joe" may want to watch his crying. A $750,000 in Quebec is: $375,000 in the bank at the end of the year (actually a little more than that i believe). Average salary in Quebec: $49,500 which means they put about $32,000 in the bank. So he's still making what the average Joe in Quebec makes in 10 years. i understand the usefulness of talking about this stuff in terms of getting all teams in line but a whining ‘Oh my god, where’s all the money?' when he's making probably 8 or 10x what his dad made/makes is not a great look. I like Pez but he needs to be thankful he's making money in Quebec at all. No guarantee another team in a more tax friendly area would want him in the first place. Guys in his position (bottom of the heap) can't be choosers. As for Tavares and his issues,,,,,cry me a river.
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Post by HTL on Jul 25, 2024 16:51:04 GMT
Let's also take into consideration that these guys are getting paid in US dollars which equates to roughly 35% more and yet they are taxed in Canadian dollars if i'm not mistaken. Pez taking home $375K actually equates to over half a million in Canadian dollars. Tavares getting a 15 million signing bonus is actually over twenty and a quarter million Canadian, which leaves him with over 12 million after having to pay the eight the CRA wants from him. What a hardship.
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regis
Le Gros Bill
Posts: 1,095
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Post by regis on Jul 25, 2024 22:28:42 GMT
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Post by ramcharger440 on Jul 30, 2024 13:21:07 GMT
Wifi is signed for two years.
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regis
Le Gros Bill
Posts: 1,095
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Post by regis on Jul 30, 2024 14:37:25 GMT
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Post by claremont on Jul 30, 2024 15:04:36 GMT
Good bridge deal - he couldn’t have expected much more based on his body of work. Provides him with some financial security and incentive to be better.
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Post by maasart on Jul 30, 2024 15:30:13 GMT
Good bridge deal - he couldn’t have expected much more based on his body of work. Provides him with some financial security and incentive to be better. Yeah i thought this one could have gone either way (short or mid) and i think this is pretty near perfect based on what Xhekaj is & what he likely will be for this team. Still would love to try him at 4th line wing from time to time. I think he could be one of those great all-purpose guys like Buff or Streit. I dont think he's good enough to be in our top 4 but he's also somewhat wasted with #6-7 minutes.
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Post by claremont on Jul 30, 2024 16:08:48 GMT
Good bridge deal - he couldn’t have expected much more based on his body of work. Provides him with some financial security and incentive to be better. Yeah i thought this one could have gone either way (short or mid) and i think this is pretty near perfect based on what Xhekaj is & what he likely will be for this team. Still would love to try him at 4th line wing from time to time. I think he could be one of those great all-purpose guys like Buff or Streit. I dont think he's good enough to be in our top 4 but he's also somewhat wasted with #6-7 minutes. We keep seeing aspects of the game where fast high skilled players dominate and put up points. Xhekaj doesn’t fit that style and is in the 5/6 pairing at present. However it’s big, physical and fast that dominates the playoffs when time and space are compromised. I hope he can improve his foot speed and positioning to round out more elements of his game. I for one want the physical hitting wear down opponents part to remain in the game ( I don’t mean the fighting). So Xhekaj for me fills several utility elements and yes - would be interesting to see him at wing.
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Post by maasart on Jul 30, 2024 17:08:07 GMT
Barron also locked up for 2 years
Two years $2.3m = $1.15 m per.
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Post by ramcharger440 on Jul 30, 2024 17:09:06 GMT
Barron also locked up for 2 years Just saw this good to get the contracts out of the way moving forward.
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regis
Le Gros Bill
Posts: 1,095
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Post by regis on Jul 30, 2024 22:04:21 GMT
If I read the attached correctly puckpedia.com/team/montreal-canadiensDvorak Armia Evans Pezzetta Gignac Barre Boulet David Savard All become UFA’s after this season That will free up at minimum three positions ( Dvorak, Evans , Armia ) maybe 4 ( Pez. ) up front And at least one on D ( but we appear to have a few guys ready to step 8n on D )
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Post by BigTed3 on Jul 31, 2024 9:42:56 GMT
Good contract for Xhekaj. I think he adds a decent amount of value, and I think we'll see that value increase if/when this team becomes a playoff team. As for Barron, I just don't have a good sense that he'll become a top 4 player in the NHL.
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