As the NHL playoffs near their conclusion, it’s becoming increasingly clear that teams from low-tax states have a sneaky advantage
By Laine Higgins of The WSJ. Excerpts:
"Of the 20 teams that made it to the conference finals or an equivalent round (since 2020), 11 hailed from Florida, Texas or Nevada—all states without personal income tax.
Seven of those teams advanced to the Stanley Cup Final, including the Florida Panthers, who defeated the New York Rangers for their second straight Eastern Conference title on Saturday night. That number could grow to eight if the Dallas Stars beat the Edmonton Oilers in the West.
By contrast, during the previous five years—when the salary cap climbed more than 15%—only five teams came from states with zero income tax. And in the nine years before that, the number of teams from zero income tax states that made the conference finals amounted to just two—Dallas in 2008 and the Tampa Bay Lightning in 2011."
"According to Sean Packard, tax director at accounting firm Octagon Financial Services, which represents over 100 hockey players, if a skater signed a $3 million contract with the Nashville Predators, he would pay zero dollars in state income tax (he’d still owe about $1.14 million in federal taxes). Had he signed that same contract with the San Jose Sharks, he would fork over roughly $371,000 more to cover California state income tax.
This taxing problem is even worse for teams north of the border. A $3 million contract with the Montreal Canadiens for a single player of Canadian origin results in roughly $1.43 million dollars in net pay due to federal and provincial tax rates that reach 53.31% for salaries above $246,752.
The upshot is that a player’s effective salary is much bigger in Nevada or Florida than New York or Manitoba."
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Do states with income taxes put their sports teams at a disadvantage? (2021)
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